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Ad Distributors Make Moves to Combat New Marketplace
By: Luke Willoughby
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On January 28, two of the industry’s leading ad distribution platforms, Extreme Reach and Digital Generation (DG), finalized a complicated and lengthy acquisition process. Extreme Reach will acquire DG’s TV broadcast distribution platform, the largest in the industry, for $485 million. The transaction was not widely publicized because distribution is a technical back-room affair in comparison to the exposed worlds of brands and media companies. But no longer is this back room so lonely. As DG and Extreme Reach have indicated in this deal, they are fighting for position against powerful new competitors in the changing landscape.

In the life cycle of an ad, distribution would be the step between the agency and the consumer. In the digital format, there is also the hands-on capacity to monitor, report, and quickly adjust the performance of a campaign. The process overall is now referred to as "ad serving." It is not sexy new technology, but the ability to validate results. And although not widely publicized, everyone is heavily invested in a suddenly crowded marketplace; especially the ones we all know:    

-Google acquired DoubleClick for $3.1 billion in 2007 to serve and valuate the ads it creates. Compare this to Google paying $1.7 billion for YouTube in 2006.

-Facebook bought the Atlas adserver from Microsoft for $40 million in February 2013. Facebook has also invested heavily in its Facebook Exchange ad platform.

-Twitter bought MoPub, a mobile adserver, for $350 million in September 2013.

The digital ad evolution has resulted in any service-based model, consumer or highly technical and niche, to provide a more integrated, full-service solution. This puts traditional "third-party" groups, like DG and Extreme Reach, at a disadvantage. They must build their niche and formerly segmented technology into a service (not easy for a tech company) and then sell to a marketplace that is quickly trying to develop its own similar technology.

To move forward, DG will retain its own digital adserver, Mediamind, which is comparable to Google’s DoubleClick in market share and capability. They will be tasked with maintaining this competitive platform as a hub, where agencies can manage digital campaigns with every necessary feature included. Essentially, they must preserve their position in the middle ground of distribution, with added services.

Extreme Reach, on the other hand, took on this investment to greatly extend its offering. They have demonstrated growth and success in reaching audiences across multiple devices, and by now acquiring the nation's largest TV platform from DG, they are aspiring to provide “TV & Online Video Together” according to their site. It is a common aspiration, but where Extreme Reach now has a distinct advantage in scale. If they can achieve a more integrated, full-service video offering with access to every screen, from mobile to broadcast TV, they will see enormous success. They will also have succeeded where DG could not.

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About the Author
Luke Willoughby works in the digital media landscape of New York across varying agencies and brands. He also has a background in video and content production, and is invested in the resurgence of the full-service advertising agency and the associated opportunities for the marketing industry. Originally from Denver, Colorado, he's a fan of most outdoor activities and otherwise enjoys reading and film.
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