The most recent examples, Verizon’s acquisition of AOL and many of its associated assets and AT&T’s acquisition of DirecTV may appear a little unusual at first glance. However when looking into the particulars the reasoning behind these mergers starts to become more evident.
Traditionally ad-tech companies operated on established media channels. Magazines, newspapers, television, radio and even cinema were the most effective means of reaching an audience.
However the introduction of mobile devices and technology has moved people away from physical media and onto digital platforms.
A report published by the Global Web Index in 2014 highlighted this growing trend, showing that in 26 of the 32 countries surveyed, individuals were spending significantly more time online than engaging with more traditional media platforms.
While this is important, the real value is in the findings that an increasing number of users prefer to utilise mobile devices and engage with online video services.
With this transition emerges a fundamental problem for ad-tech companies: more mobile devices reduces the effectiveness of channel-based advertising and messaging.
In order to continue to influence consumers, companies now need to find a way to combine the user experience across each device to seamlessly deliver content to the consumer wherever and whenever.
This is key to understanding both the Verizon and the AT&T acquisitions, as the deals will provide access to the mobile and video platforms, allowing both companies to target consumers through cross-screen connection advertising.
This is particularly the case for Verizon who already have unprecedented access to users’ mobile data, but have historically been unable to utilise this information due to a lack of ad-tech capability.
The new mergers have huge implications for the industry, as now those providing mobile services will be controlling content and launching targeted advertising campaigns on all media platforms regardless of whether it’s via televisions, computers or mobile technology.
For several years the monopoly that carriers held over ad-tech has been in steep decline, with device manufacturers like Apple and Android making considerable advancements into the sector.
Facebook and Google have also managed to establish themselves as heavyweights in the personalised advertising world.
However, deals like the ones initiated by Verizon and AT&T represent legitimate attempts to re-establish the power balance and reclaim at least some of the influence that network providers used to wield.
The future of ad-tech is a complex one and competition will remain fierce for the foreseeable future. However one thing is for sure, large data collectors will continue to look into acquiring smaller companies offering connections to their target audiences, ushering in an age of ultra-personalised multi-platform advertising which can reach niche audiences on a massive scale.