The recent acquisition of Operative Media by SintecMedia for an estimated $200 million marks another milestone in the AdTech game of musical chairs. At their core both companies assume the burden of ad operations for their partner companies. Sintec has made a name for itself in the TV world, claiming 100 brands and $30 billion in revenue managed across 40 countries. Operative has become one of the leading digital advertising operations companies.
So, another merger. Where’s the milestone? This acquisition represents the realization that the demarcation between advertising and digital advertising has been killed. It’s all just advertising. This death has been approaching over the last five years. Video has been capturing budget and other resources from traditional TV, but 3-4 years ago it was still an afterthought. The digital world was excited to see all the zeros and high CPMs of video, but digital still represented a tiny fraction of the TV advertising budget. These lines have been collapsing. RTL’s investment in SpotX, the rapid growth and profitability of OTT video (Hulu, ESPN, HBOGo, etc.) and the changing viewing habits of the developed world all show that what used to be “digital” is now just advertising.
The analog world is still kicking, but the action has shifted. Most TV is still sold face to face, and some people even still buy ads on dead trees. The interesting growth is not in digital, it is in the transition of analog to digital. While this shift is still early in TV — as it is in audio and digital out-of-home — the scales have tipped and people are rushing to get on the digital side. This includes not only the media sellers, who are integrating their digital teams into their traditional sales teams, but also agencies, where the hundreds of billions in advertising dollars are actually deployed.
The next wave of the advertising revolution will be tracking, internalizing and leveraging the lifetime value of the customer. To do this, the leading contribution of digital advertising — audience targeting — is spreading to all other elements of advertising and marketing. And now, the audience is migrating from a cookie to an identifiable person. This is the MarTech revolution, but that is too small an acronym. It is really a MadTech revolution, combining the dream of one-to-one marketing from one side of the house with the analytics of another side of the house, with exploding methods and options for capturing and leveraging data.
So, good luck to Operative and Sintec. The deal makes sense on paper, alone. More importantly, for companies still searching for strategy, product market fit, growth and advantage, the deal shows that they need to get past the narrow confines of AdTech and look at where the excitement lies.
Author: Jonathon Shaevitz
Jonathon Shaevitz is the CEO of Industry Index.