May 18th, 2007

The New Vertically Integrated Media And Advertising Companies

by

It’s clear now that the media and advertising industries, which thanks to Google and Web 2.0 now include the software industry, will be dominated by a new breed of company — the vertically integrated media and advertising company. Google’s AdWords created a new model by combining a media company — Google’s search results and its network of AdSense affiliate websites — with an advertising agency, i.e. advertisers buy ads directly from Google through its AdWords platform. Google also revolutionized the media and advertising business by introducing a data-driven dynamic marketplace into what had once been a market based largely on human relationships.



With Microsoft today announcing the acquisition of aQuantive — a digital marketing, ad serving, and ad network company — following on the heals of Google’s acquisition of DoubleClick, Yahoo’s acquisition of Right Media, and WPP’s acquisition of 24/7 Real Media (which includes a content network), the trend is clear. These vertically integrated media and advertising companies will battle it out for control of all of the dollars in the online advertising value chain.

AOL’s acquisition of Advertising.com several years ago fits in this same category, a highly prescient move in retrospect. Also following this path is the CBS Interactive Audience Network, which will syndicate CBS content and share ad revenue with sites, effectively creating an ad network.

Like Google with AdSense, all of these companies can make money off of advertising run on other media company properties. The evolution of an industry like this could indeed only take place on the “Web,” because the economics of all the players have become deeply entangled.

All of these vertically integrated media and advertising companies are positioning themselves to profit from the $70 billion in TV advertising that will eventually flood into online advertising.

The big challenge is figuring out how to efficiently spend all of those brand dollars, half of which have traditionally been wasted. The big players have acquired the assets they need. Now comes the hard part.

Comments (30 Responses so far)

  1. una mejor situación, pero la concentración no creo que nos ayude sino más bien al contrario: quienes tendrán la sartén por el mango serán Google, Yahoo, Microsoft, WPP y algún otro grupo más (y por ese orden, creo). Más información en Publishing 2.0. [IMG]

  2. a digital marketing, ad serving, and ad network company ? following on the heals of Google?s acquisition of DoubleClick, Yahoo?s acquisition of Right Media, and WPP?s acquisition of 24/7 Real Media (which [?] The New Vertically Integrated Media And Advertising Companies It?s clear now that the media and advertising industries, which thanks to Google and Web 2.0 now include the software industry, will be dominated by a new breed of company ? the vertically integrated

  3. “The big challenge is figuring out how to efficiently spend all of those brand dollars, half of which have traditionally been wasted. The big players have acquired the assets they need. Now comes the hard part.” Publishing 2.0 “I think this shows one more thing – talks of Microsoft buying out Yahoo at Yahoo’s terms goes down and this move could potentially put more pressure on Yahoo. ” Sadogopan’s Weblog “I believe, old media will be a huge beneficiary of the online

  4. with marketing services that deliver measurable ROI. Online tools are cool. Online impressions are cool. Without the knowledge on how to use them to make $, they aren’t as cool as they could be. That’s where marketing services comes in. That’s WHY Microsoft bought aQuantive. Scott Karp says it best: Welcome to the Land of the New Vertically Integrated Marketing Services and Media Companies. Posted at 11:59 AM | Permalink | Comments (0)

  5. 1:40 PM [IMG] Scott Karp / Publishing 2.0: The New Vertically Integrated Media And Advertising Companies

  6. [IMG] Scott Karp / Publishing 2.0: The New Vertically Integrated Media And Advertising Companies

  7. Aanbevolen leesvoer The New Vertically Integrated Media And Advertising CompaniesPrivate label brands "may come to the games market"Next-gen business models are "embarrassing"Nieuwe generatie video advertentiesAmazon Acquision of DPReview.com Should Drive Traffic From CNET

  8. The New Vertically Integrated Media And Advertising Companies [Publishing 2.0]

  9. una mejor situación, pero la concentración no creo que nos ayude sino más bien al contrario: quienes tendrán la sartén por el mango serán Google, Yahoo, Microsoft, WPP y algún otro grupo más (y por ese orden, creo). Más información en Publishing 2.0. [IMG]

  10. of very large firms that control 90%+ of all online advertising.” Does this rash of acquisitions signal a maturation of online advertising, or is it, like an arms race, unnatural growth in response to overwhelming demand? Further Reading The New Vertically Integrated Media and Advertising Companies (Publishing 2.0) Microsoft Jumps into Online Advertising with aQuantive Acquisition (Don Dodge) Microsoft to Acquire Online Marketing Firm aQuantive for $6 Billion (Search Engine Land)

  11. and it turns out he guessed low: The Web company was sold a year later for several billion dollars–to another technology company. Once again, the newspaper industry failed to pull the trigger on the future. Some things never change. Publishing 2.0: The New Vertically Integrated Media And Advertising:It’s clear now that the media and advertising industries, which thanks to Google and Web 2.0 now include the software industry, will be dominated by a new breed of company – the vertically integrated media and advertising company. Google’s AdWords

  12. selling, and distributing web-based advertising, primarily to support their own sites. But, as long as they are developing this advertising expertise to support themselves, will they also make this expertise available to others as a separate business? Publishing2.com says “yes,” but I suspect that ultimately these advertising techniques will be easily understood and copied by others, many of whom may be more adept at it or have better access to specialized resources. For the time being, I

  13. Esta compra supone el siguiente paso en la evolución de la plataforma publicitaria de la compañía, Microsoft Digital Advertising Solutions, que incluye MSN, Xbox Live, Windows Live y Office Live” Via : publishing2 Noticia : Microsoft Share This

  14. wants to inflict a truly vicious wound on Microsoft, in the soft underbelly of Microsoft’s core business, in order to weaken Microsoft’s ability to compete with Google for the real prize — online advertising. Google acquires DoubleClick, and Microsoft responds by acquiring aQuantive. So how does Google respond? By launching Google Gears, an OPEN SOURCE platform that enables not just Google apps to be used offline, but for any developer to make ANY app available offline. Google Gears is an open source plug-in for browsers, which

  15. about perceptions and relationships than hard ROI. That’s one reason why Google has struggled with brand advertising and had to buy DoubleClick to acquire the relationships with media buying agencies that control brand advertising dollars — and why Yahoo and Microsoft followed suit. Brand advertising will be a big driver of growth for online advertising, and the challenge for online media companies is to optimize ad sales in the fuzzy middle between online-native direct response and offline-native brand advertising.

  16. [IMG]If the future of advertising is online, many companies, including Google, Yahoo, Microsoft, and WPP, are betting that the future of online advertising is in ad networks, i.e. centralized platforms for the buying and selling ads, where the company that controls the network controls the sale and the flow of revenue to the publisher. This is

  17. but in order for Madison Avenue to compete it’s going to have to be completely dismantled and rebuilt. Of course, Yahoo and Microsoft (and let’s not forget WPP) are also competing with Madison Avenue — and with Google to become the ultimate vertically integrated media and advertising company. But the game is all about scaling — and when it comes to scaling, Google will be hard to beat. [IMG ] [IMG] (This blog post stolen from Publishing 2.0 at http://publishing2.com.) Dallas SEO Company

  18. Larry Allen, SVP, Business Development and Marketing at TACODA. Believe it or not, we completed this interview before the announcement that AOL has acquired TACODA. Relevancy is in the air (and so are ad networks).

  19. von a similar accpetance that print is finally dead, even for those parts of the business that cannot yet access digital media. So that’s no access to a kiosk, mobile phone or computer outside of work (ah the digital divide). Really?! As in the ad world

  20. to be a medium,” he added. “We will partner with them as we do partner with CBS, ABC, Time Warner or any other media group.” While Google, Yahoo, and Microsoft, with their recent advertising platform acquisitions, see are betting they can create vertically integrated media and advertising companies, Publicis is betting — as it must — that advertisers will be wary of the fox selling the hen house. For self-serve search advertising, that horse is already out of the barn (to mix fram metaphors), but the drama is still yet to play out for the big

  21. “these vertically integrated media and advertising companies are positioning themselves to profit from the $70 billion in TV advertising that will eventually flood into online advertising. ”

    The assumption is that the agencies, networks, cablecos, satcos and local broadcasters in the TV ecosystem are roadkill? But will GOOG, YHOO, MSFT et al pick up that $70B? Not likely if online advertising is so much more efficient (and it is). The aggregate spend will go down a bunch with tough times for Madison Avenue. Ouch! that’s only half a block from here.

  22. Uh oh…what does this mean for ValueClick? The biggies have made their move…is there anyone left of size who is willing to pay the big $$$ for the last remaining singleton???

  23. [...] Megan Smith, has been an executive at Google search since 2003. – Is this really that clear, Scott Karp? “It’s clear now that the media and advertising industries, which thanks to Google and Web [...]

  24. [...] of company — the vertically integrated media and advertising company,” Scott Karp writes at Publishing 2.0 adding that these “vertically integrated media and advertising companies will battle it out [...]

  25. [...] Google is, or how this is going to be a year of acquisitions, or in a typically intelligent piece, how we can look to vertically integrated models of advertising now, I think one angle about this purchase is how it speaks to Microsoft’s intended goals for the [...]

  26. [...] doubt even Microsoft would spend $6 billion without thinking long and hard about it. Scott Karp at Publishing 2.0 thinks “it’s clear now that the media and advertising industries, which thanks to Google and Web [...]

  27. [...] for themselves, will they also make this expertise available to others as a separate business? Publishing2.com says “yes,” but I am skeptical that these advertising functions require proprietary technologies that others [...]

  28. [...] RSS News Feed ← The New Vertically Integrated Media And Advertising Companies [...]

  29. [...] relationships — especially the largest brand advertisers — which has lead to the recent M&A activity around ad network and ad platform companies. Google AdSense, Tacoda’s behavioral targeting network, AOL’s Advertising.com network [...]

  30. [...] end game of course is to convince advertisers to run all of their ads through Microsoft’s growing online advertising infrastructure (which they still hope will include Yahoo), so that they can consolidate all of the available user [...]

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