Digital offers more precise measurement than most channels, which has helped move the industry from an art to a science, according to Brian Andersen of Luma Partners.
“And as part of that [transition], they need to know: How do we manage our data? How do we use our data for targeting? How do you understand what’s working and what’s not working?” he said.
The ability to measure in digital has spawned many a startup, which is where Luma Partners’ M&A advising comes in. Andersen sees digital’s measurement focus spilling into other channels, such as TV, creating new acquisition targets.
And digital’s complexity has sprouted many other types of measurement, from ad viewability and invalid traffic measurement to attribution modeling, location tracking and people-based measurement. Some of the companies specializing in these areas are now ripe for acquisition.
Andersen talked to AdExchanger about his M&A predictions for the measurement space.
AdExchanger: Which area of measurement is the next frontier in terms of marketer and investor attention?
BRIAN ANDERSEN: The role of identity in measurement. If you are doing people-based marketing, you should have people-based measurement, where you are using identities as part of the measurement solution. That’s why we are so bullish on identity solutions in general.
Tied into that is getting closer to measuring the end result, meaning when people use a click as a proxy for success for a campaign, success is actually a sale. With the fragmentation of devices and services and sites, it’s important to understand how digital affects in-person purchases.
People-based marketing often relies on huge data sets from big players. What can be done by a startup versus Facebook and Google?
One area we are still really hot on is location. Location is highly strategic. Many large enterprises don’t have solutions yet. Anything that is associated with an in-store purchase can use location as a proxy: Did the movie trailer drive a person to go into the theatre?
Integral Ad Science is a terrific business in a critical area. They are absolutely a leader in the space.
Being the last man standing can be hugely beneficial from a scarcity perspective. There are more buyers out there that should have those [measurement] capabilities than there are [acquisition] targets.
Does the need for third-party neutrality limit the buyer pool for Integral Ad Science?
There are plenty of enterprise software platforms. Oracle and Moat are neutral parties, and there are other marketing clouds.
That said, Google has a massive measurement business with Google Analytics and Analytics 360, and they’ve done a good job creating products that secure the trust of those that utilize those products.
You can be a media-based company that has those products, as long as you operate them independently – though there is a strong case to be made for companies that have no perception of conflicts.
Facebook buying Atlas is a good example of a media company buying a measurement company. What’s your retrospective on that acquisition?
Atlas had atrophied over the years. There was a sizable capabilities gap because it hadn’t had the investment it needed. And ad servers are incredibly sticky platforms. They are a workflow people live in every day. But they also capture all the data and analytics.
Displacing a workflow system that has a ton of historical data is a hard sale. They are still utilizing that capability as part of advanced measurement, just in a different way.
Nielsen and comScore seem like logical acquirers in the measurement space. Why haven’t they been that active?
I think they are absolutely part of the mix. ComScore has their accounting issues to work through. Nielsen is the dominant company for TV measurement. They don’t have their head in the sand. They understand where the market is moving, and they are not going to cede their position in the market.
I do believe there are players in the market that provide an opportunity or pose a threat they can take out defensively, they will acquire them. But Nielsen is still in a very strategic position where contracts in the TV industry are written based on Nielsen GRPs.
Where in measurement will we see the most M&A action in the near future?
Advanced TV measurement is one. Location capabilities, like Snap’s acquisition of Placed, is another. There are other location companies out there that have solutions like that.
One area we haven’t talked about is marketing dashboards. How many marketing and advertising platforms does a large or medium-sized marketer use? And every one has its own dashboard. There are companies like Datorama and Origami Logic and Beckon that aggregate that information for marketers.
This interview has been condensed and edited.