If 6 Turned Out to Be 9


It’s no secret that Google has been shopping for a so-called Demand Side Platform (DSP) for some time.  With the AdMob acquisition signed off by the Feds, the rumors are that Google will acquire Invite Media (http://mediamemo.allthingsd.com/20100523/with-admob-out-of-the-way-is-google-set-to-buy-invite-media/), a DSP known primarily for a user interface that enables audience buying across exchanges.  This move seems sensible enough as a way for Google to shore up its exchange user interface, which even Google concedes needs more care and feeding.  But would it undermine the core value proposition of the DSP?

A history lesson: before DSPs, online display advertisers have had to rely on the sellers of media to target, price, and optimize media.  That’s why agencies have become so reliant on ad networks.  And that’s why their clients increasingly are questioning the value added and the fees paid for media planning in the digital era.  Enter the DSP.  Using a DSP like DataXu, an agency and its client can for the first time effectively crunch their own proprietary data, develop their own campaign algorithms, and seek price/performance optimality across multiple sellers, effectively breaking the reliance on the seller to deliver all the value.

So the question is: would buyers rely on the largest digital media seller for their media investment allocation decisions?  Would a Google system ever have a buyer take money out of Google media and allocate it to Microsoft, Yahoo, Apple or other supply-side aggregators?  Consider the potential similarities to Google’s search engine marketing model – very efficient, but advertisers must accept the one-size-fits-all approach and seller-controlled black box algorithms.  If you’re a managing director of a digital agency, consider how much value you are creating for yourself and your clients if you leave the work to the seller.  Isn’t that how the agencies got into the current pickle in the first place?  It will be interesting to see how this all plays out!

(**Another history lesson: For those who may not be Jimi Hendrix fans, the title of this post references one of his greatest tracks – and the potential role reversal of sellers becoming buyers.)

– Mike Baker, CEO, DataXu