Advertiser Impact of Microsoft - Yahoo! Combination
Advertisers and ad agencies are abuzz with the prospect of a Microsoft - Yahoo! combination announced this morning. On an investor call this morning, cash king and man-at-the-helm Steve Ballmer said “scale matters”. This from a man who likes to win the “size” wars.
What are agencies and advertisers thinking this morning? Consider:
- Impact of Consolidation. There are two sides to this coin.
- First, advertisers will be thrilled with the prospect of a serious challenge to Google’s hegemony. It’s a little added bonus that GOOG disappointed with their earnings (lucky timing). “Micro-hoo” will have to grow search share and defend and expand Yahoo!’s long-standing leadership with branded display ads (which Google is about to attack aggressively with its pending acquisition of DoubleClick by leveraging its DFP ad serving publisher base and DoubleClick ad exchange).
- Second, watch for the continued rise of the “independents” — independent ad networks, ad exchanges, ad serving companies. Either way to slice it, we are a talking about a monopoly (Google) or a duopoly (Google and Microsoft - it’s funny that Microsoft is almost certainly annoyed at the prospect of a duopoly…) and advertisers are not interested in putting all their eggs in one proverbial basket. This holds true for Sir Martin Sorrell of WPP and are in the “frenemy” camp or if you are John Wren of Omnicom and are in the “best of breed” camp. Either way choice is, as Martha Stewart would say, a good thing. Among the independents would be ValueClick (independent ad network and ad serving - watch this stock go up and to the right), yours truly-ContextWeb’s ADSDAQ exchange (independent ad exchange) and an assortment of independent vertical ad networks.
- Media Fragmentation, Scale and Control
- This Ballmer-Yang duo still needs to address the burning issue of media fragmentation impacting many advertisers. Audiences on the portals (Yahoo.com, AOL.com) are in decline and these users (the people advertisers want to spend money to reach) are spending more time on small and medium-size content sites–Chris Anderson’s Long Tail. This issue is not addressed in this transaction. No one here seems to have an asset like Google’s 1,000,000 Adsense publishers or a coherent plan on how to secure an asset like this.
- Scale and Control–the need for “Brand Safe” advertising environments. We predict the “word of the year” in the online advertising business will be: PLATFORM. It’s the P-word, learn to love it. Many of us are building scale around platforms (ContextWeb’s own ADSDAQ ad exchange, AOL’s Platform A and purchase of Tacoda, Yahoo!’s purchase of the RightMedia ad exchange and BlueLithium ad network, Microsoft’s purchase of the AdECN exchange). But advertisers are a (rightfully) demanding lot and they want scale AND CONTROL across these platforms. Most media companies are not able to provide this key “control” element. This is a barrier that must be eliminated before ad dollars, especially brand advertising dollars, flow onto these platforms.
Post a comment and be sure to see our earlier post on the MSFT-YHOO combo on its impact on the advertising exchange market.
More Links: Search Engine Land, The New York Times
-- Jay Sears
Sphere It