Traditionally, advertising technology and marketing technology have performed disparate functions. While digital advertising primarily facilitates the buying and selling of inventory, digital marketing specialises in a variety of functions including personalised website content and analytics. However, changing consumer habits have now created a crossover between the two landscapes.
With the proliferation of online content, competition for audience attention is fierce. Both advertisers and marketers require a detailed understanding of consumer preferences and behaviour to create content that will stand out and resonate with their desired target audience. There is also a shared need to analyse the impact of campaigns and use the results to adapt current efforts to maximise performance.
Ad tech has unlocked and refined the power of data collection, providing advertisers with access to highly valuable first-party and third-party audience data that can make ads more targeted and effective. As technology becomes more sophisticated, competition in the sector is heating up and a new breed of technology vendors has arisen. The quest to obtain the most advanced technology to leverage consumer data and ensure relevant ads are delivered at the right time, on the right device, is driving increased levels of interest in the potential of young and innovative ad tech companies.
It is no surprise that M&A deals in the ad tech sector in 2014 were worth double that of the year before. The vendors with the most sophisticated algorithmic systems are also those with the most valuable data – and therefore often boast the highest levels of performance. The trend of larger vendors acquiring those with the latest technology continues apace with Opera MediaWorks’ acquisition of AdColony and Telstra’s purchase of Videoplaza.
The commercial opportunities presented by advances in ad tech are increasingly attractive for mar tech vendors, who recognise the benefits of shifting their focus from software to the aggregation and application of data. The appeal of leveraging data to drive audience profiling and more targeted ads to create higher ROI is strong, as is the promise of a large share of the marketplace. Notable M&A deals by mar tech vendors include Publicis Groupe’s purchase of its own DMP, Run, and media giant WPP’s acquisition of a 15% share in AppNexus.
In a recent article, Ciaran O’Kane suggests this initial blurring of the traditional lines between ad tech and mar tech is a sign of closer ties to come. O’Kane’s predictions include Salesforce purchasing a DSP to allow its vast roster of SMEs to purchase digital advertising, effectively acting as a gateway between the two ecosystems. There is also the possibility of Adobe building on its data management and analytics solution by adding an ad server. This would enable users to access multiple services in one place.
There is no doubt the technological landscape is shifting. The need to provide ever more convenient ways to manage media and serve relevant and successful ads is driving a rise in the consolidation of mar tech and ad tech. So are the two functions destined to become united? That remains to be seen.