Consolidation – A Giant Collapses

 As the Online advertising industry grows dramatically and we see continuing articles of projections and growth, the question is are you aware of the immense changes that are occurring simultaneously at a pace almost to fast to track?

 Online Advertising is expected to grow more than 30 % this year alone according to Deutch Bank in conjunction with Media Post. Each day we are reading articles discussing the redistribution of advertising dollars from traditional media to the internet. Yet, we are also reading daily of giant offline companies like Equifax and IAC purchasing companies like ours seemingly every day. While this is extremely exciting for our industry, we must look beyond the excitement and understand how this will all affect us: and not just long term but in the immediate future.

 There are many ever changing factors coinciding in the online universe simultaneously which create the space for both opportunity and potential loss which all of us need to consider.

Cash Infusion – Online advertising is growing by billions of dollars each year, and this is just the beginning. With this amount of money being literally dumped into this industry, several things will occur and have already begun to occur.

1) Acquisitions and Mergers. Large offline companies are acquiring smaller online companies which have web distribution and revenues. These new conglomerates are becoming a “one stop shop” for both online and offline media. Much like Wal-Mart, these companies will soon be taking out the small and medium size players as they have far more resources to participate within the marketplace ( Most of us are waking up to new billion dollar competitors we find entering our space).

Easily Accessible Industry – Our industry is very small and there are only so many legitimate and effective players.

1) Large advertisers are now finding the “source” of ad placement and distribution directly. Whether it is striking a relationship with email publishers or site owners directly, advertisers are becoming savvier which in turn finds many ad agencies and brokers losing their ability to position themselves for the margin they once commanded for their relationships. Many list managers and publishers are handling the media buying for clients now directly.

2) There is only so much online distribution available, only so many emailers, pops, and sites with high converting traffic. Similar to the corrective process banners went through where we found the larger, more serious companies setting the standard, so too will all of our current forms of marketing be corrected. The players of today may very possibly no longer be in business in the manner in which we know them six months or a year from now.

Industry Changes – our industry is literally going through a metamorphosis. The way ad campaigns will be marketed in the near future will evolve and may look very different a year from now as new technologies address current challenges.

· Ad ware issues
· Click Fraud
· Email deliverability
· Pop network issues
· Increasing media prices

Due to these and other challenges that both we as marketers and the advertisers face, we are already seeing a trend in the way media is purchased. Rather than large media purchases, advertisers are now looking to purchase actual performance. Simply put, they are taking the conversion to a customer in a different light. Large advertisers and retail clients are now purchasing only qualified leads, which in many cases they are setting up phone rooms to convert and close the leads themselves. We will see a continued tidal wave of lead gen programs allowing those companies focusing on lead generation becoming powerful targets for acquisition.

 Industry Consolidation has been a part of business throughout history. Our industry happens to be in the absolute middle of the largest growth any industry has witnessed to date. As exciting as this is for all of us, be aware that it is occurring at a far more accelerated rate than we can comprehend. Forward thinking companies such as my own are now strategically searching for partnerships which will allow them to round out their suite of services and become a necessary component of any large corporation looking for both the retail customer and advertiser, while owning the distribution.

 The winners in this historic period will position themselves by finding a way to bridge the gap between the end client and direct access to the consumer. They will win because they will move quickly and quietly to gain control of each.

Jeff Carlisle is Founder and CEO of Lead Blitz, an Online Advertising Network specializing in all forms of lead generation. www.leadblitz.com [email protected]  (866) 225-6845