Forget about HuffPo or what’s left of the surprisingly profitable subscription dial-up unit: One of the primary reasons Verizon bought AOL was for its ad tech business. The deal is a validation of programmatic advertising, but it also signals the end of programmatic’s startup era.
The revolution is now in the hands of tech/media conglomerates. That will likely mean a wave of consolidation among the various demand-side and data-management platforms, and the other vendors that populate ad tech; some will win, many will lose. But the deal’s real winners are marketers, because the more things change, the more they stay the same.
When AOL merged with Time Warner back in 2000, the idea was to combine an early online network (and all of its underlying technology) with a media and advertising business. Arguably, that deal was a good idea in theory, even though it failed.
Today, one of the names has changed and the other has moved to the opposite side of the deal, but the combination’s basic premise — that marketers demand synergy between network infrastructure, media, and advertising — remains as true today as it was back then. What’s different this time around is that ad tech is finally ready for an infrastructure company like Verizon to make the world boring, and by extension, functional.
“Marketing is rapidly becoming one of the most technology-dependent functions in business,” a CTO and marketing analyst for Gartner wrote in a Harvard Business Review article titled The Rise of the Chief Marketing Technologist. In the most recent Accenture CMO Insights survey, 78 percent of marketers said they believe marketing will undergo a “fundamental” change over the next five years, becoming significantly more focused on technology. And for the past few years, marketers have come to accept as gospel, the Gartner prediction that CMOs will outspend CIOs on technology by 2017.
On the surface, Verizon’s acquisition of AOL looks like a continuation of the trend toward tech-centric marketing. But is that really what happens when an infrastructure company like Verizon enters a space that has been dominated by innovation and disruption for nearly two decades? Typically, the arrival of infrastructure offers the following benefits: consolidation; standardization; compatibility; and portability.
Assuming Verizon’s competitors follow its lead into ad tech — a safe assumption given the larger trend of telecoms moving into the media business — the industry will, soon enough, begin to resemble a maturing, stable business, rather than the “Wild West,” as so many marketers describe ad tech today.
Consolidation will streamline the field of vendors into a more manageable group, relieving marketers of the constant burden of vetting ad tech’s latest “flavor of the month.” Standardization will allow marketers to make apples-to-apples comparisons when sourcing ad tech, as well as reduce the cost of switching. Compatibility and portability will foster more (and better) second-party data sharing and more turnkey applications.
There’s historic precedent for this. Commercial automobile production began in the late 19th century, but it wasn’t until 1908 that Henry Ford showed us a glimpse of a mature car industry with the arrival of the Model T. The telephone business took decades to go from Bell’s lab to an indispensable feature in every office and home, but it wasn’t until the phone reached that level of infrastructure that every user was able to begin to realize the full potential of this powerful tool.
In our lifetime, the personal computer wars of the ‘80s and ‘90s may have been dominated by tech enthusiasts battling it out over standards and protocols, but ultimately consumers got interoperability and portability. (When was the last time you heard someone complain they couldn’t read your document because you wrote it on a Windows computer and they have a Mac?)
Along the same lines, cellphone technology was a messy Wild West before the arrival of the iPhone. Soon after Apple planted its mobile flag, the industry consolidated and standardized to the point where the most popular app companies need only make two versions (Android and iOS).
More importantly, the app ecosystem is a remarkable improvement over what it was five or six years ago, which is why smartphones are no longer tools reserved for techies and early adopters, but rather universal equipment for everyone.
As ad tech evolves from the bleeding edge of innovation into boring infrastructure, a lot of the tools and platforms we geek out over today will lose their appeal. That may sound like heresy for an industry that spent nearly two decades innovating at a dizzying pace. But for the marketers who are increasingly at the center of ad tech, boring infrastructure is a good thing.
After all, marketers want people talking about their message, not the pipes that deliver that message. And while technology will play a role in what marketers do, deals like this one mean that marketers can stop being procurement officers and get back to the creative art of marketing.