After having a closer look at the range of companies in the exchange space during her months at AppNexus, Clarizio pointed to a lack of differentiation among the major players and the layers of complexity that have been gradually introduced to a process that promised to simplify the buying and selling process, particularly around display and video.
"There are so many businesses that touch every dollar of advertising that goes through that funnel," she said. "Every ad dollar that passes through an agency might get handed off to an independent trading desk, then on to a demand side platform, then on to an ad exchange, then onward again through a supply side platform, with an ever smaller fraction of that marketer's spending ending up in the hands of the website publisher. And all along the way, there are a number of companies hawking 'ad safety' services or 'brand lift' tools. All this has made online advertising more expensive and less efficient than it should be."
The realization of that complexity has become acutely pointed for bankers and investors, as financing has become tighter in the face of companies like Foursquare reportedly struggling to raise their most recent rounds.
At the same time, there haven't been as many large acquisitions in the past year, though there have been notable exceptions such as Yahoo's $1 billion purchase of Tumblr, as smaller companies – take this week's Twitter purchase of Foursquare-type location services app Spindle, as an example – have been snapped up relatively cheaply.
As media investment bank Jordan, Edmiston Group, Inc. noted earlier this year, the value of deals announced in the first quarter of 2013 declined 38% from $12.2 billion in Q1 2012, with fewer large transactions. There were only 118 deals in the Marketing and Interactive services space that added up to $2.5 billion during the period, down from the same quarter 2012 by 13% and 14%, respectively
In terms of where most of the ongoing M&A activity will be generated from, Clarizio said that Facebook is likely going to continue acting as a serial acquirer, while Amazon has been slowly building its display and retargeting skills for the past few years could insinuate itself as purchaser more and more over the next year, though it's just as likely to build more capabilities on its own.
"When I was at INVISION, I was able to step back from the online ad space I was involved in during my years at AOL, and when I arrived at AppNexus, I'd seen how much the industry had evolved," Clarizio said. "Seeing how powerful buy side platforms had become, and seeing how many companies had emerged to take advantage of importance of exchanges, just led me to question how many of them are really adding value. I think we'll have a clearer answer about who does and who doesn't over the next year."