Now that the merger of Donovan Data Systems and MediaBank into Mediaocean has passed regulatory muster, it's worth asking whether the combination will accelerate the adoption of online media buying methods to the TV space or if it will complicate those efforts. As Bill Wise makes the transition from head of MediaBank to CEO of Mediaocean, he made his case to AdExchanger.
The advancements in media buying have been fitful the last few years, but the industry has finally seemed to be moving forward on the promise of "revolutionizing" the ossified process of transacting ad buying and selling. It’s hard to believe though that after 15 years since internet advertising became mainstream, that many of the orders for those ads are still done manually. Apart from the continued search for more comprehensive audience measurement, the frustration of discrepancies and delays in processing media buys ranks as a regular industry complaint.
Aside from offering Mediaocean as the grand solution to the industry’s ad buying issues, Wise also told us how he views the integration process and whether an IPO is in the new company’s future.
AdExchanger: Since the deal between Donovan and MediaBank was announced last fall, the estimated price was said to be $1.5 billion. Is that accurate?
BW: I’m not going to comment on the valuation. What’s really exciting about this, is that we’re not just taking two companies and combining them for economies of scale – though there is that advantage, which I’ll get to. We truly have a new path forward that we think will change the industry.
AdExchanger: For the past few years, Donovan and MediaBank were pretty tough competitors. There’s an argument to be made that that by serving as a strong rival to Donovan on things like pricing and innovation served the advertising industry pretty well. How does this combination move the industry forward?
Advertising has gotten so complex and so inefficient to buy, especially when you think of all the different communications that have to take place between so many different technology players. You can look at all of the companies – there’s probably about 250 established companies in the space – and then consider layering social, mobile and other devices on top of all that. I believe that all media will look like digital is today. You’re already seeing it with categories like digital out-of-home, which has been growing significantly the past few years. TV is becoming more digital through connected sets, video-on-demand and set-top box data.
So within the span of the next 5- to 9 years, the systems will need to handle the complexity that exists in digital display today. And right now, digital display is broken.
AdExchanger: Can you elaborate? How is it broken?
BW: Digital display is broken because there's no single currency to process media buys. As a result, there are discrepancies, lost impressions, there are tags and data that are lost. So Mediaocean's plan is to create that one currency that will fix those problems.
This is a massive, expensive undertaking. So what the merger gives us is the economies of scale to actually go an invest huge amounts of profit back into the business. The systems we have for TV, print and radio are great for yesterday’s marketplace. They are no longer adequate for tomorrow or today, for that matter. For example, print is now on the tablet, and radio is now streaming on websites or in apps like Pandora.
The advertising business has to completely reinvent itself. And we’re a part of that process.
AdExchanger: With you at the top of Mediaocean, does this mean MediaBank’s proposition won the race between it and Donovan?
BW: This is not about a Donovan takeover or a MediaBank takeover. This is a truly new entity and that’s why there’s a new identity called Mediaocean. Donovan has been around for 40 years and we’ve acquired technologies that have been operating for 30. So collectively, we’re pretty old companies.
We’ve always built products. All the code is owned by us. What it takes to be successful in the current ad environment involves building platforms. And the idea is that those platforms will interoperate with the best of breed of other technologies.
Think about smartphones. About 90 percent of the content that sits on my smartphone didn’t come from the manufacturer. It came from third party developers. And that’s what we aim to create: the ability for technology companies and data companies to develop on top of us.
If you think about our system for traditional broadcast, we have our own workflow, our own data layer, our own bill pay and we’ll integrate with Nielsen for ratings. But if you think about digital, so many agencies have gone out and created their own agency trading desks, which encompass the respective agencies’ own data and workflow.
Our new platform will enable agencies to put in their own workflow, if they want, as opposed to being forced to use ours. Those are small nuances that become critical when you think about how complicated it is to buy.
AdExchanger: Before this merger, MediaBank’s acquisition of demand side platform AdBuyer was the company’s biggest deal to date. How does that property fit into the new company and what have you learned about the integration of AdBuyer into a larger entity?
BW: AdBuyer was an interesting acquisition. I stated back when we bought it that we didn’t buy it to be in the DSP business. We acquired AdBuyer for its DNA. What AdBuyer did a really good job of was coupling together a slew of third party and technology data players. In a small way, what AdBuyer did was what we want to accomplish across the board.
AdExchanger: So how will the integration work in the case of Donovan and MediaBank into Mediaocean?
BW: This integration is an interesting one, because we have committed to our partners that we will maintain both traditional systems. What we also committed to is building the new OS and the new platform. There’s actually not a lot of overlap on the traditional side.
The key to our future success is to change the DNA of two successful companies away from building products and towards building a platform.
The integration is also about mixing in new digital talent with people who deeply understand the legacy systems. Usually, the success of an integration is how two companies come together. That’s going to be pretty easy. But that’s also why it has to be Mediaocean, not “Donovan” or “MediaBank.”
AdExchanger: Will the new platform ultimately supplant the legacy systems?
BW: We believe the new digital system and the OS platform will be able to handle all media types over time. Out of the gate, the first focus is digital. Traditional media will follow after that.
There’s only been two companies in the history of ad tech that have been able to figure out client accounting and bill pay at scale: Donovan and MediaBank. The expertise here is phenomenal and we can’t lose it.
AdExchanger: So will there be any layoffs or staff overlap?
BW: Because we’ve been competitors up to now, we haven’t had any talks about product integration or staffing. We’re literally just starting that process now. There are a handful of senior executives at Donovan that have decided to retire. In some cases, they’ve had a 30-year run at this and I take my hat off to them. And I take it upon myself to make this new company last at least another 40 years. But in terms of the staff or shape of the organization, we’ll be figuring that out over the coming weeks and months.
AdExchanger: What is Michael Donovan’s role as chairman going to entail going forward?
BW: After two hours together finalizing the deal, I leaned back and said to Michael, “I have to apologize to you.” He asked, “What for?” I told him, for the last two years, I have villainized you because we competed so fiercely. And the man is brilliant, passionate and genuinely cares about his products and the uses of his products.
When there is something that goes down at DDS, he has to be brought in because no one knows that company better than Michael. At the beginning of this merger process, he said he needed a succession plan and he felt I was the guy to take the baton from him. For past five months, we have both spent a lot of time talking to clients, educating the market, and the U.S. government why we think this is a good thing for the industry. So I’m coming out of this with a great partner who is there to guide and support me. So I’m happy to have him as executive chairman and I view this as a partnership. And beyond that, our skill sets are really complementary.
AdExchanger: MediaBank was formed in 2007 by Brad Keywell and Eric Lefkofsky, two Chicago entrepreneurs who also founded online daily deals purveyor Groupon – and that company was taken public. The stock market is doing better at the moment. So we couldn’t help but wonder: does this foretell an IPO for Mediaocean?
BW: IPOs are interesting. A lot of people portray an IPO as an ending of some sort. But I would argue that an acquisition is more of an ending than going public. It’s just another phase of a company’s growth.
Collectively, we’re a very profitable company. And we’re committed to investing those profits back into the business to continue to evolve our company and the industry as well. As you invest in a company, you want to realize something from it. As to an IPO, I wouldn’t say there is anything imminent or that we’ve even been thinking about Mediaocean in terms of doing an IPO, simply because we’re in transformation right now. To be honest, we’ve got to prove to everyone that we can deliver on the huge the promise we’re making in terms of changing this industry. Until we’ve done that, we don’t deserve to talk about an IPO.
AdExchanger: With the go-ahead from the Department of Justice on this merger, are there any other hurdles that you’ll have to deal with before you get started on bringing the two companies together in earnest? For example, are there any international approvals that need to be met?
BW: MediaBank only did business in North America, so there were no other regulatory matters domestically or internationally to manage. We’re just ready to get started on building the new company right now.
By David Kaplan