Merger Mania

Seems like every which way you turn, there’s another merger happening. Recently, Unicast, famed for its Superstitial product, announced the acquisition of ailing rich media company Enliven. What does this development mean for the future of rich media?

First a little background. I just returned from the iMedia Summit. For those of you unfamiliar with this event, the top sellers and buyers in the online media space get together a couple times a year for a meeting of the minds.

During a working lunch, we were asked our reaction to the announcement of the Unicast/Enliven merger. My table of six buyers and sellers seemed to agree (go figure): The acquisition could undoubtedly create an 800-pound gorilla. When we were asked if that would be problematic to the industry, I was surprised that some said no.

We all thought the merger made sense. It seemed as if Enliven wasn’t doing well financially. Like many others, the company seemed to be struggling to survive. The merger, however, boosts Unicast’s overall market share to about 80 percent. This, to our group, was the scary part. We are completely dependent on, but fear, “another Microsoft.”

Contemplating another Microsoft spawned endless banter about pricing and how the merger might affect it. We planners and buyers have to be quite careful when evaluating whether to use such creative in our buys. Most agencies and media companies aren’t marking up items such as total media costs, third-party ad serving, tracking, stewardship, and measurement tools. We’re often challenged with stretching nominal dollars to create robust online media plans and have experienced situations in which the creative and production costs equaled the total media spend.

For example, a planner has $200,000 to create a strategy for a given target in a specific geography. After in-depth research, the planner finds that this target is receptive to streaming audio/video/rich ad units. The planner knows the creative team has multiple messages available to test the receptivity of this audience. The media and creative teams crunch the numbers, and it goes something like this:

Media dollars + third-party ad serving (based on a negotiated CPM) + creative and production costs + rich media production costs (an additional rate generally billed as a CPM from the vendor and/or the site) = total spend Quite often the creative numbers turn out to equal the media numbers. One of the sellers at the table added that these vendors charge publishers a fee as well.

We also agreed on just how advanced technology is getting. Pundits seem to slam online ads because of their limited pixel sizes. Many traditional media types think online advertising could never stimulate emotion like television ads do. Those of us at the table, though, thought there is absolutely no truth to that today. Rich media units have brought the “wow” factor to the Internet. A 30-second TV spot can be placed on a Web site and have a fast load time, killer visuals, and realistic sound. Perhaps this merger will allow others to step up to the plate? We hope, too, that it will force acceptance and standardization among publishers.

In the end, here’s the question we were left with: Does the cost of implementing rich media units equal the benefit? If pricing isn’t nailed down, it can prohibit advertisers from using these solutions. Economical solutions are crucial to the growth of this space.

When you look at the big picture, Unicast’s 80 percent market share still only represents 5 percent of total online advertising. I ask you, dear readers, why aren’t more companies implementing rich media in their buys? My Enliven sales rep emailed saying, “We all believe that with more effective formats on one end of the continuum and more effective reporting and tracking on the other, the industry can move faster to realize its potential. Unicast has a well-established reputation for remaining committed to industry growth and supporting its customers and partners to see that goal to fruition.” I guess my question back would be, “Great, but does it prohibit others from entering the space?”

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