Dynamic Logic absorbed DoubleClick's Ad Effectiveness unit last week. Is more consolidation what the industry needs?
Eight months ago, the Diameter group, a research division of the stalwart interactive media technology and media network sales organization, DoubleClick, appeared on the scene with little fanfare but some excitement.
Born mostly from the need to accommodate DoubleClick's acquisition of @plan and its relationship with comScore Networks, Diameter promised to be a bastion of sensible Web research. Diameter's research would finally provide advertisers with the kind of information the more traditional among them had been clamoring for. The tripod upon which Diameter stood was Media Intelligence (@plan), Audience Measurement (netScore), and Advertising Effectiveness Tools (something altogether new).
Last week, DoubleClick announced that it will essentially offload the Ad Effectiveness unit to its more successful rival in this area of research, Dynamic Logic.
Dynamic Logic currently has an impressive list of publishers using its product: MSN, Terra Lycos, CBS MarketWatch.com, About.com, American Greetings, CNET, New York Times Digital, and Wall Street Journal Online, to name just a few. The company has helped produce some sound research in the area of just what it is online ads do beyond acting as click-through media, most notably the IAB and MSN studies released in July of this year.
In an internal memo issued to DoubleClick employees, CEO Kevin Ryan said that following nearly 100 customized ad effectiveness studies for 35 clients, "what we've realized is that it's now time to take that learning and help move the industry forward by supporting a standard tool for the measurement of online ad effectiveness."
Is DoubleClick shedding its Advertising Effectiveness Tools practice because the company wishes to altruistically support the development of standards, helping the industry evolve to a point of no longer being marginalized by the advertising establishment? Is it selling the Advertising Effectiveness practice for a 10 percent stake in Dynamic Logic because it wants to help an embattled industry by bequeathing rare manuscripts of learning as an endowment to the library of Internetdom?
Of course not.
DoubleClick is a business. What it realized is that the market for advertising effectiveness research, though extant, is not nearly big enough for multiple players. Dynamic Logic, which was playing in the space first, was getting more new and repeat business, while the Diameter group was still figuring out what ad effectiveness really meant.
It had the programmers and the technicians but not enough of an advertising research knowledge base or commitment to renewal that traditional advertisers are looking for. The unit wasn't doing a crisp enough business to support itself.
The territory was relinquished to the only other body out there still paying: Dynamic Logic.
By doing this, is DoubleClick "supporting a standard"? Well, yes. But a standard by default.
This is the same thing that happened to television research over the last few decades. When Arbitron, the radio research and metrics concern, finally gave up on trying to do for television what it now does for radio, Nielsen became the de facto standard for television advertising and audience measurement. Others have tried to compete, but it's too late. The hundreds of millions of dollars it would take to develop a system powerful enough to compete would never take hold. If your current mousetrap looks like it works, would you buy it even if someone builds a better one?
No. That's what DoubleClick was faced with.
As the industry continues to mature, as is the case with every industry, consolidation is inevitable during the march of progress. It is happening with publishers, technologies, and certainly among audience measurement and research concerns. Remember NetCount, PC Meter, Relevant Knowledge, PC Data, NetRatings, I/PRO, and others? Now PC Meter (Media Metrix), Relevant Knowledge, and NetRatings are all on the verge of becoming one company, and the only other real third-party audience measurement and auditing tool out there is comScore's netScore. It is not hard to imagine that eventually there will be just one.
There are certainly both positive and negative arguments regarding this sort of "standardization by default." It clears the way for agreement within the industry about how certain things are measured and thus identified. We can all stand on even ground and use the same language. When we say "site W has x number of adults 25-54, and my ad effectiveness with some y level of advertising weight is projected at z," we won't constantly be redefining our terms.
This is not to say that Dynamic Logic is an unworthy winner. I happen to think that it is the best out there at what it does, and it deserves to be the last company standing. But I wish to make a point that the DoubleClick/Dynamic Logic deal this week merely serves as a conceit.
As William Blake wrote, "The eagle never lost so much time as when he submitted to learn of the crow."
The strong may survive, but that doesn't mean they are always the best.
August 10-12: Revolutionize your digital marketing campaigns at ClickZ Live San Francisco! Educating marketers for over 15 years, our action-packed, educationally-focused agenda covers every aspect of digital marketing. Early Bird rates available through Friday, July 17 - save up to $300! Register today.
US Consumer Device Preference Report
Traditionally desktops have shown to convert better than mobile devices however, 2015 might be a tipping point for mobile conversions! Download this report to find why mobile users are more important then ever.
E-Commerce Customer Lifecycle
Have you ever wondered what factors influence online spending or why shoppers abandon their cart? This data-rich infogram offers actionable insight into creating a more seamless online shopping experience across the multiple devices consumers are using.