ad:tech: proof of bubble 2.0?

I participated in ad:tech San Francisco 06 last week and was blown away by the number of attendees and exhibitors.  While I was very excited by the energy at the event (great to feel marketers primed to invest in internet marketing, and vendors anxious to introduce new technologies), the cynic in me couldn’t shake the “been there, done that” feeling.

A feeling associated with what we at Forrester have dubbed “Bubble 2.0” -- the recent boom of venture-backed vendors touting very similar capabilities but with no clients (In fact, this trend is not unique to vendors.  There are content companies springing up too, that provide no actual content). 

Here are my observations from ad:tech about which areas are garnering the biggest vendor attention:

  • Search marketing – By far the largest number of exhibitors fit in this category.  We counted 43 exhibitors specializing in paid search management, search engine optimization, customer acquisition via search and other online advertising, maximizing affiliate marketing performance through search, and vertical or local search.  The challenge for vendors in this category?  The sheer volume of competition.  So many vendors (even those specializing in areas completely unrelated to search) are jumping on the search bandwagon that any one vendor will have a tough time differentiating itself from all the others.  Additionally, few vendors seem to recognize the increasing complexity of the space.  I’m beginning a Wave evaluating search engine marketing vendors at the end of this quarter.  As I expect many of the features that manage program execution to be very similar from one provider to the next, I believe the leaders will be vendors who have a vision to provide services that will help marketers manage the convergence of online media.
  • Ad networks – Ad networks represented the second largest group of exhibitors (we counted 36) and most of them had the same trouble search marketing agencies do: articulating what they do that is different and unique from competitors.  In 2001, I wrote a piece called “Ad Networks Bring New Value By Leaving Old Ways” which said that ad networks which provided only reach and demographic targeting would not survive.  This has proved to be the case, and today’s ad networks tout their contextual and behavioral targeting aptitudes as well as their ability to connect advertisers to premium publishers.  The new challenge for ad networks is that there are too many of them to provide advertisers exclusive benefits.  I expect some massive consolidation in this space within the next 18 months as dominate players like ValueClick gobble up smaller networks in order to build out the volume of sites and consumer data needed to execute behavioral targeting well.

What vendors were noticeably absent at ad:tech?  Email and social marketing firms.  We spied a few emailers (Skylist and Yesmail) but most ESPs chose not to exhibit.  We also ran into RSS provider SimpleFeed, but uncovered few other specialists in any social media like RSS, blogs or social networks.  Why?  Well, I think email is so well established as a marketing mix mainstay that ESPs don’t need to drum up any more awareness.  They’ve all made the wise decision to stay home and concentrate on working through integration issues with their “new” database marketing parents.  And to the absence of social marketing vendors?  Maybe this space is still just too new.  Although I’d have loved to get a better pulse from the show about “what’s next,” I found ad:tech confirmed our pulse on what is here and now: search and online ad targeting.

Tags: , ,