My take is that this is all much ado about nothing. Why?
*Google is an easy target. Google is so large, and has seen such rapid growth over the last 3 years, that we all (competitors, consumers, government officials, press, industry analysts) can't help but be a little suspicious of them. And maybe a little jealous of their wealth and presence.
Early this morning Microsoft announced it will buy online marketing company aQuantive -- the holding parent of interactive agency Avenue A/Razorfish, display and paid search ad mangement platform Atlas and inventory management system DrivePM. The $6 billion deal cash deal represents an 85% premium to aQuantive's closing price last night and will likely close during the first half of 2008.
I think there are two obvious calls to make based on this deal:
1. The acquisition certainly builds out Microsoft's access to the entire online advertising supply chain. Prior to the acquisition Microsoft had the execution channel -- sites where advertisers could buy ads. Now, they also have the upstream pieces of this chain: planning, strategy, creative. WPP is working toward a similar goal with its recent announcement to acquire 24/7 Real Media. But WPP had the planning, strategy, and creative pieces and bought 24/7 for access to the downstream channel.
As the day continues, the talk of a Microsoft/Yahoo! union is sounding more and more specious. None-the-less I thought I'd weigh in with my take on what this pairing would mean for interactive marketers.
I still think Yahoo and MS are wrong to continue to chase Google. If that is what this potential merger about it just seems really naïve. Billions of dollars to try to “catch up” to a company that will only continue to out-innovate them.
I'll admit. I had my money on Microsoft taking DC as a technology solution to their ad serving need. And I think if the deal were only about technology, Microsoft would have made a solid suitor. But DoubleClick brings Google much more than an ad serving solution. What's my take on this deal?
*Google wins. We've been watching Yahoo! and MSN chase Google since paid search marketing exploded as a marketing channel and major revenue source for the three portals. This deal ends the race. With its DoubleClick purchase Google extends its capabilities into online display advertising and completes its set of online services.
*Its not about the technology. Google already had ad serving. This deal gives Google access to publishers outside of its current AdSense network and to behavioral data that will help them with ad targeting.
*Now Google can move offline. I agree with Charlene Li on this one. With the online space locked up, Google can focus on maturing its current offline efforts and on defining its next moves into traditional channels.
This past Tuesday, AOL put in a 6.3 billion kronor (about $900 million) bid for Swedish ad network TradeDoubler. Although TradeDoubler's board voted to accept the bid, one of its largest share holders rejected the bid as undervalued. The take among the investment community is that this is AOL's attempt to expand advertising revenues now that it has moved away from its subscription-based business model. While I think this is certainly true, I find a few other angles of the potential acquisition more interesting:
We're all finally settling down from our blockbuster of a consumer forum in Chicago last week (check out http://blogs.forrester.com/consumerforum for summaries, thoughts, and highlights from the event) and processing some of the learnings that came out of our client conversations. I didn't end up listening in on very many of the main tent speakers as I was pretty booked with one-on-one sessions. These are 30 minute, in person meetings that forum attendees can book with the analysts of their choice to discuss business issues. I was definitely tired after my few days of back to back one-on-ones, but to be honest, I came back to the office pretty recharged. I've been so heads down on research of late, that it was really nice to engage with clients face to face. I really enjoyed sharing ideas and meeting the real people who are out there reading my research!
One topic that came up several times in one-on-ones with different clients is: the role of the service provider in the next era of marketing. We've all been talking about integrated marketing for years. And this year's forum theme pushed integrated marketing even further by looking at how to "Humanize the Digital Experience." This means the entire integrated customer experience.
On September 14, I posted a notice about a research study we had in the works on The Interactive Marketing Organization. Thanks to everyone who participated in the survey!
We've gotten about 150 responses and have actually closed the survey (just in case you have tried to take the survey recently and found the link inactive). I'm currently at work on the report this data will feed. But since that is still several weeks away, I wanted to provide you with a few previews of what we learned:
*Companies actually have a surprising tenure with interactive marketing: 79% have been using interactive marketing for more than 3 years; 52% for more than 5 *Interactive marketing teams are generally small (39% have IM teams with 1 to 5 people). However 18% report teams that are quite large (31 or more people) *Interactive marketers outsource less than I had expected with 59% outsourcing less than 25% of their work. *Younger IM organizations (those using IM for less than 5 years) are generally less strategic than more senior organizations. They have less staff, less budget, but better executive support than IM organizations who have been using interactive marketing for more than 5 years.
I’ve gotten a number of press calls since Yahoo announced it has missed its earnings on October 5 asking if I think this indicates a larger slow down of interactive marketing spending overall.My response to these qualms “No way, Jose.”Here is what I think is happening:
*Interactive marketing spending is definitely different today than it was in the boom times of Bubble One (circa 1999-2000).But this is a good thing.Today, more traditional marketers are including online advertising, email and search marketing in their marketing mix.This provides stability and legitimacy to interactive media which it did not have when it was supported solely by dot coms.
The theme for Forrester’s upcoming Consumer Forum is “Humanizing The Digital Experience.” What makes a digital experience more human? First, it must be useful. Second, it must be usable to the point that the technology fades into the background. Finally, the best digital experiences are desirable enough to stimulate action (e.g. buying a product, or telling a friend about the experience).
After years of clumsy and cold web sites, examples of desirable experiences are starting to pop up everywhere. Witness MySpace.com and NASCAR’s PitCommand (a mobile application in which fans can track in real-time the speed, RPM, throttle, position, and time of their favorite driver). These are great, but can every online experience be desirable? What about when a company is trying to sell you something?