You Don’t Control Your Digital Technology Decisions, M&A Does

“Data Driven Thinking” is written by members of the media community and containing fresh ideas on the digital revolution in media.

Today’s column is written by Cameron Hulett, who is Executive Head of Solution Strategy at Acceleration.

When someone is betting millions, they’ve typically done their homework. So when you see the current M&A activity in digital marketing, you have to ask yourself: Why is this happening and how does it impact me as a marketer or publisher?

We’ve all gasped at acquisitions such as Yammer by Microsoft, BuddyMedia by Salesforce, Vitrue by Oracle and Conversen by Experian. Jordan Edmiston Group reports that the number of deals in 2012 has risen by 52% over 2011, showing broad consolidation across the industry, typically driven by large players. The most interesting extrapolation of the hard figures is that “broad based marketing technology” M&A is taking over from pure “ad technology” M&A. This shift signifies a coming of age – an age where large players soak up the exuberances of the past to offer complete enterprise marketing systems.

Without the scale and end-to-end integration, marketers merely have a collection of point solutions that each add limited value and hence are always under pricing pressure from their clients. A great example is the data management platform (DMP) vendors, where most of their clients are battling to find the resources to extract the value, which is no fault of the vendor. It is simply more difficult to do within a broader data management context.

The large players on the other hand are positioning themselves as the architects of the digital marketing future and see a similar evolution to the “enterprise resource planning” space. There they dominated, generating enormous value by stitching together the entire value chain. And the timing is perfect to do the same in digital marketing – the typical 5 year investment window of most venture capital firms is at an end and with over $1 billion invested in the space, pickings are ripe for buyers. To prove the point, just look at IBM who has invested over $3 billion in enterprise marketing management in the last 2 years alone.

This means marketers and publishers are mere spectators as this unfolds. The ground is shifting below you as the M&A storm rages around the new “enterprise marketing technology” center of gravity.  There is little you can do to stop it. You’ll buy a technology today and find it owned by a competitor tomorrow. Your smart decisions become meaningless because you can’t predict the changes. From CRM to Social to DMPs. Irrespective of which tools you select or implement, chances are those businesses will be acquired, pivot or partner before long.

But within this storm, you have to not only survive, but thrive. To do this, make sure you work with people who have a keen vision of the future and who can shed light on complex situations. Then implement your chosen solutions quickly, integrate them well and ensure your data stays portable. This is not the time for long-winded analysis paralysis. Above all, keep moving forward through the storm of change, capture best practice and institutionalize your processes, so that when the dust has settled on the platform wars, you’ll be ahead.

Follow Cameron Hulett (@cameronhulett) and AdExchanger (@adexchanger) on Twitter.

 

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