We somehow neglected this last week. 

Achieving the highest order of business PR notoriety short of a live interview with Money Honey,
Maria Bartoromo, AKQA‘s Tom Bedecarré had his woodcut head shot in the Wall Street
Journal last week. Score another coup for, ever so briefly an SFIer,  Molly Parsley.  Now Tom can die, except that AKQA
hasn’t gone public yet. Then he can die. He joins FOBs, (Friends of BC) Ken
Gilbert , Aims Coney III and Andy Serwer in the woodcut picture club. 

AKQA is making fast use of its General Atlantic stash o’ cash by picking
up SearchRev, a four year old search marketing technology and services company
in Palo Alto. Props to Tom and to SearchRev
founders, Eduardo Llach and David Kandasamy, good guys all. We met David and Eduardo back when they were
5 people sitting in a small room with no furniture just off University in Palo Alto. 

I would expect that we’ll see AKQA make more acquisitions of this sort so
that Tom and his private equity partners can start making some money in their sleep instead of relying
solely on the dreaded service model. And
I’m guessing acquisitions like this aren’t going to hurt valuation come IPO
time.  GA probably thought about that.

So begins David Verklin’s ad campaign for his new title, Watch This, Listen Up, Click Here: Inside the
300 Billion Dollar Business Behind the Media You Constantly Consume, co-authored by Bernice Kanner.

He’s not messing around. The Arizona Star summary went a little somethin’ like this:

Rumors of the impending demise or serious wounding of the advertising
industry by warp-speed advances in communications technology are
greatly exaggerated.

Who’s getting wounded here? Technology may be double-edged sword, but one of those edges just ain’t sharp. (Maybe the Critical Edge can help.) Verklin and Kanner have clearly done their research, and they certainly have plenty of experience, so the book reads like a "helluva primer on advertising across multiple platforms, including TV, the internet, print media — even pornography."

But maybe we shouldn’t be listening to Verklin (of Carat) and tune in to my old favorite Maurice Lévy of Publicis  Groupe, whose acquisition of Digitas was said to have been the trigger to the string of interactive agency and ad network acquisitions – the latest one being AOL and Tacoda. 

A piece in the New York Times focuses on Publicis/Digitas and their grand ambitions. Last Tuesday they announced their purchase of the 12-year old Chinese digital agency Communication Central Group, for a necessary foothold in the Chinese market, which is apparently growing at 20% a year. (Global growth is around 5%.)

And if China = mass, (which it does), then their methods will surely have to be more in line with the idea that we’ve been preaching for years now: the future will simply have to rely on automation. Mark Beeching notes, “The more you can standardize and automate in terms
of making different versions, hallelujah." Hallelujah indeed.

Google, Yahoo!, Microsoft, WPP Group, and AOL sittin’ on a fence

Passing over ValueClick cuz they got sense.

It’s high school all over again. Right Media, DoubleClick, aQuantive, and 24/7 get "adopted" by the cool kids for whatever reason and it is looking more and more like ValueClick is going to get left on the sideline. Maybe they didn’t have the right-colored checkered Vans.

Mediapost reports that shares dropped as much as 23.5% on Monday. In May, during the M&A frenzy  when the popular clique was extending its hand towards the lesser-known, like teen movie social makeover artists Cher from Clueless, or for our older audience, or Henry Higgins in My Fair Lady/Pygmalion, online advertising company ValueClick was rumored to be the next purchase. But maybe they started flying too high. Stock prices grew to $36.70 which put it out of reach of many potential acquirers. 

And now with this lead gen whoo-hah, their potential strengths in display ads, behavioral
targeting, affiliate marketing and comparison shopping are being overshadowed by the $10 million hit. Both publishers and advertisers are pulling back, for fear that ValueClick will get nailed during the FTC’s industry-wide probe into promotional lead generation practices.

Paul R. La Monica concludes on CNN Money:

…investors need to be cautious. Picking stocks, not sectors, makes
more sense. Every business, even one as robust as online advertising
will have its winners and losers. And just because a company is a loser
doesn’t mean that it’s necessarily going to be taken over for a big
premium. Rather, it may simply continue to struggle for the foreseeable
future.

The New York Times covered the Sun Valley Summit this year, gathering of bigwig media types from all over, from Rupert to Larry, Jerry to Meg, Terry to…Tony Blair?  Hey, who invited that guy? (Party foul.)

The conference, once meant to be a haven for the Hollywood elite to discuss big ideas in a relaxed and remote atmosphere, is now known as a "birthing ground for mergers." Media mergers, that is. The kind we’re interested in, and the kind that have been making all the news this year and last. And in fact, there were high expectations coming into the weekend.

What deals would occur? 

Who has the prettiest private jet? 

And would Google and Viacom square off for a duel on the grassy knoll by the lodge’s romantic swan pond?

Who would you put your money on? Sure, Google’s got the technology, overqualified Ivy grads, and bouncy balls, but these old guys are tough. Viacom’s chairman, Sumner M. Redstone, has seen quite a few things in his 84 years, and according to the Times, seems like a man "who  believes he has a firm grip on the levers that run the world." Indeed, I would not underestimate their ties to business and political leaders and the clout they have, not just among each other. They got the goods: tremendous assets and the ‘tude to back it up.

But deep down, they must be just a little bit scared. They can’t play dumb anymore, and they must know that the days of controlling consumers will soon be over. Especially when companies like Sling Media introduce a box that allows consumers to watch their home television programming anywhere
there is broadband.

…the version of the future that Slingbox and its ilk
represents — a frictionless environment where consumers are surrounded
by media at a time and place of their choosing — is a threat on all
fronts to the people who own the pipes and what goes through them.

But for all the hype, and all the supposed confrontation, there wasn’t any fighting, and there wasn’t any dealmaking. Perhaps there were a few whispers or behind-the-back winks that we’ll hear about later, and until then, we’ll just have to hold our breath.

3-9-9 bottles of beer on the wall, 3-9-9 bottles of beer,
Take one down, pass it around,
…3-9-8 bottles of beer on the wall.

If by bottles of beer I mean media companies, and by take one down I mean being acquired, then let’s all sing along, shall we?

But I didn’t say it. Matthew Schwartz of B2B did. Not in drinking shanty form, of course; just reporting the news of the study released yesterday from media investment bank Jordan Edmiston Group.

But 2-3-8 of these beer bottles – let’s call them the Fat Tire of the group – represent the online media sector with a combined value of $32 billion and 40% of the overall stack. (Did I say stack? I meant stacked.) Overall media deals rose $12.4% in the first half, but online media deals rose 20% with a value of $4.2 billion. And online landed 5 of the Top 10 deals in the overall media and information group. (See the full chart here.)

Numbers, numbers. I’m no analyst, but I can crunch those for you. It means that all those acquisitions – Microsoft-aQuantive, WPP-24/7, you know the rest – were not for nothing. Like a bundle of sticks, they are a strength that cannot be broken. (No, I didn’t get this proverb from my Native American grandmother. It was my soccer coach.)

On a less cheesy note, this data shows us that online media is being dragged into the general flow of major media M&A trends. They’re being snapped up because, well, they’re more valuable. I mean, what do you want to drink on a crisp summer afternoon in San Francisco? A PBR? Or a smooth, refreshing Fat Tire?

But maybe Tolman Geffs of JEGI said it better:

There isn’t such a thing as old media
anymore. There’s only
diversified media. Every major media company is working hard to reshape
their distribution model to reach new audiences, and that’s going to
take years to pan out.

The first time was a great time  Yahoo! already had a
foot in the door at Right Media when they paid $45 million for a 20% stake back
in October. Right from the get-go, they knew they had a piece of something
good. After seeing a 50% increase in the price of ads on the “non-premium”
pages made available through Right Media (via BusinessWeek)
they were sittin’ on top of the world with Barrington Levy. But, like good little major portal, they
were wanting more ammo in the fight against Google. With the formation of
GoogleClick, the wheels started turning in Terry Semel’s head. Oh, and people
probably started yelling at him too. Catch up, they said, and do it fast.

The second time was a blast One of the major values that
he probably saw in Right Media was their ability to create bundle deals that
include both premium ad space – or le crème de la crème
as they might say in countries of the French persuasion – with lesser,
“secondary” spaces. These second-timers have value, too, as advertisers are
looking more and more for visibility in niche audiences like blogs and
community Web sites. These “twice-removed” spaces are more than happy to be
included in the family because it helps them to monetize their otherwise
segmented inventory. Another type of second-tier community based platform that
could join the Yahoo!/Right Media network would be something like digitized
billboards, which would be a wise move considering the rise
of out-of-home media ad spend by 27%.

The third time I fell in love They’re gazing lovingly into each other’s eyes. They’re petting each other in public. It’s
true love. Yahoo! could (and has) talked for hours about Right Media’s open
auction system that gives marketers targeted information about Web viewers that
helps them to decide what to bid for that space. Furthermore, the transparency
of the system encourages more bidders, which then results in higher prices for
the sellers. Both benefit, both enjoy the fruits of the system. It’s the kind
of thing that might make your heart go boom.

I’m not even going to talk about why Right Media likes
Yahoo!. How many times can you say 20-something multimillionaire three times
fast?

Now I hope it lasts  So, as with any love story, we have to question, how long
can this last? He’s a poor farm boy, she’s a pretty pretty princess. Not just a
princess, but one whose father insists that they eventually incorporate his
small farm into their large kingdom, and something tells me that his sheep are
not going to be selling for the same prices as before. When Daddy knows all,
how can you keep it fair?

“If
the exchanges all become owned by the large competitive ad networks, aren’t
they just really big networks then?” asks Greg
Sterling. Right Media CEO Mike Walrath retorts:

It’s
important to reiterate publicly that the acquisition will in no way afford
Yahoo! any unfair advantage in the Exchange. A level playing field is one of
the foundations of the Exchange and its success–it remains level. The fact that
the Right Media Exchange will operate as an independent division of Yahoo!
ensures this.

Terry
Semel of Yahoo! also
insists that they will continue to follow a capitalistic, democratic model,
in which “supply and demand [are] regulated by the marketplace, not a closed
platform.” I would say this sounds very patriotic, but look at how he is slamming
Google! That’s just un-American.

Speaking
of capitalism and big players, take a look at how Microsoft
is eyeing 24/7 Real Media, driving its original valuation from $600 million
to $1 billion. People have also speculated that they are considering an
acquisition of aQuantive, partly for Atlas ad-serving capabilities but also to
have stake in creative ad agency Avenue A/Razorfish. Now that’s just downright annoying.

But maybe
they’re just all after the right stuff and, like the New Kids, looking for that
one thing that will make “all of their dreams come true.”

The Big News of the day is undoubtedly Google’s $3.1
billion purchase of DoubleClick. After all, you can read about here…and here…and here. Oh, and here. And then of
course there is the news of the reaction from AOL, Yahoo, Microsoft, and all
their pals as they cry, “Hey! No fair!” You can read that here – and here. In fact, I think it is safe to say that this deal is dominating
the news today like a 5^th grade bully. Or, for a closer metaphor,
like the State of the Union – even when it’s a whole lot about nothing.

But it’s not as if nothing else is
happening in the world – online or off. What happens to all the little bits of
news that fall by the wayside? They might have otherwise had a chance at the
big time, but tragically were overshadowed by this acquisition. I mean, on the day that Reagan died, the Berlin wall fell, or Britney shaved her head, scientists in the Amazon may have discovered a new species of toad, or other offbeat news might have occurred that was subsequently pushed
to the bottom of the page. “Rats!” they thought. If only we’d been a day
earlier – or later. It’s all about the timing.

Let’s go one step further: what about personal news? The Internet has enabled each of us to be our own beat reporter,
hot on the story of our lives. For example, yesterday I tried matcha tea for the first time.
It was marvelous. I could also report that there is something
obscene written in Flemish with a purple Sharpie on my left forearm and that I am having
difficulties removing it. Finally, my breaking news of the day: I am closing a
deal that involves the $3.10 acquisition of a new Uniballer pen.

So, forget Google, forget DoubleClick –
heck, forget Sallie Mae, al-Sadr, and the Boston Marathon.

What’s your news?

The
WSJ story that came out last week that DoubleClick
is for sale was greeted with oohs and ahhs by everyone who thought that
Microsoft was a shoo-in for the ad serving company and the
DART technology that would come with it. With more than 1,500 clients and a
well-developed system of targeting, delivering, and tracking online ads, it
would have given Microsoft a much-needed leg up on Google: $150 million to $200 million, to be exact. AG Edwards analyst
Kevin Bittigieg remarked (via Mediapost)
that DoubleClick’s platform “would provide a boost to Microsoft’s online
services ambitions which have so far been lackluster.” Lackluster? You can say
that again.

But
suddenly, things have gotten complicated. In a move that probably has private equity firm Heller & Friedman greedily
rubbing their hands together (they bought DoubleClick in 2005 for $1.1
billion), Google has decided to join in the bidding war. Two billion? Chump change. What about
Yahoo! and Time Warner, we are asking ourselves. Yeah, what about them.

Here’s
another question: What’s left of DoubleClick anyway? Pieces of it have been
sold off during the past two years, like its Abacus data management unit,
reports B2B
Online. What remains is their online ad business, which is what everyone is
all fired up about anyway, considering, as Shar Van Boskirk of Forrester
Research declares, that “Online advertising is back in vogue.”

But Phil Wainewright has an interesting take
on it in his post on ZDNet.
His view is that the whole ordeal is all for nothing, because DoubleClick
serves banner ads – which, according to him (and
Tim O’Reilly) is sooooo last century. The future, he says, is in the PPA
(Pay Per Action) beta that Google is developing, or, more likely, the Context
Links that Amazon has implemented that ultimately becomes a PPP (Pay Per
Purchase) system.

But watch out, Googs has been sneaking around behind our backs yet again. This is madness, I tell you. Madness!

This news about Publicis Groupe acquiring Digitas for the sum of $1.3 billion got me thinking, not just about the move from traditional media to interactive, or as chairman and chief executive Maurice Lévy put it: "a massive, massive transfer of investment from
traditional media to the Internet," but about what makes people pay the amount they do for things. Clearly a company like Digitas was worth that much to Publicis, who recognize the growth of the online advertising industry, not to mention the fact that they have a whole team of analysts to tell them that. But what drives the decisions of the average person? Why do we drive three miles out of our way to save $.03 on gas, but not even flinch about handing over five bucks for a cup of coffee? 

I’m definitely the wrong person to be talking about economics. I failed Econ 101 in college. No, I didn’t really “fail” it, that’s just code for doing so badly in it that I was forced to take it “pass/fail” for fear of injuring my G.P.A. with a big fat “B,” which in Ivy League language translates as “You obviously don’t understand any basic economic concepts and don’t deserve even to pass this class, but I’m worried that if I subject your perfectionist personality to something less than an “A” you’ll do something drastic like jump off of a bridge, or worse, withdraw your grandfather’s endowment.”

So I somehow made it out of there without ever really understanding the supply/demand curve, let alone marginal utility.
But I do watch people, and buying behavior is something that will never cease to puzzle me. I’ve seen wealthy investment bankers shy away from the bar when it’s their turn to buy drinks, and consoled a friend whose boyfriend criticizes her for shelling out extra money on what he calls designer shampoo – which means any brand that is not Suave.

To make a long story short, people are funny with money. What’s even funnier is when you inflate it to a large scale and find the same kinds of idiosyncrasies, but on a higher level. Billions of dollars, hundreds of people’s lives and jobs, major acquisitions that can change the shape of an industry. 
I’m sure there is a whole regiment of strategy, risk analysis, and future projection that is behind every major business decision. And yet: what makes something worth a certain amount?

Broad question, specific answer. These are a few things that we would pay $1.3 billion for:

Google, Inc. – but ONLY if you threw in their new New York office, lava lamps and abacuses included.

An almanac for the year 2010. Who didn’t secretly love that Back to the Future II premise when Biff makes his fortune from knowing the outcome of every sports event of the century? Only instead of betting on the Kentucky Derby, we’d check out every IPO and "new hot thing" of 2007 and monetize those suckers!

China. Why not? That’s only a dollar per person. Then, we would take over the world. Awesome.

A really good cup of coffee. Oh wait, move a few decimals. No more than $1.30, and that’s that.

Finally, we’d pay $1.3 billion to be the supersuave Maurice Lévy, French advertising magnate, and my personal hero. (Not really. It’s Li Ge.) With a nickname like "Monsieur Big" and a head of hair that screams sexy fortysomething (Real Age: 63. How do those Frenchies do it?) he’s even hotter than Uncle Edgar of Le Divorce.

Do you think he’d pay five bucks for a cup of coffee?

Maybe, if it was French Roast.

aQuantive’s Avenue A/Razorfish acquired London-based digital marketing agency DNA – extending their global reach and acquiring some impressive clients (like BMW).

According to this Ad Week article, DNA expects revenues in fiscal 2006 of $8-$9 million. aQuantive is putting $4.8 million up front, with the remainder to be based on performance.