Summary:

Both Donovan Data Systems and MediaBank have been working to expand the methods of online media buying and selling to traditional media thro…

Mediaocean

Both Donovan Data Systems and MediaBank have been working to expand the methods of online media buying and selling to traditional media through their mutual software offerings — now, they’ll do it together, the two said in an e-mail announcement. The two are merging and will now be called MediaOcean. The new entity will run by Michael Donovan, founder and chairman of Donovan Data Systems, as MediaOcean executive chairman and Bill Wise, MediaBank CEO, as the new company’s CEO.

Beyond applying the ways of internet advertising to traditional media, both companies have been promising to improve the online media buying process.

It’s surprising that even at this late stage, when internet advertising in the U.S. is approaching $30 billion a year in spending, many of the orders for those ads are still done manually; some are still done by fax machine. For the past few years, there have been a number of companies offering to solve that problem and bring the industry into the 21st century. Unfortunately for most of those companies, Google (NSDQ: GOOG) has been the company closest to making that happen.

For the most part, Donovan and Mediabank have aimed their guns at each other. But the merger is a realization that in order to compete with Google’s dominance, especially as it looks to extend its reach into TV ad selling and over-the-top TV services, the only real chance they have to make a difference is to team up.

In a blog post, Terence Kawaja, head of Luma Partners, the investment bank that managed the deal, offered this rationale for the merger:

For years, we have been suggesting that the fragmented landscape of advertising technology intermediaries could use some rationalization. There are too many duplicative systems, platforms, standards, workflows, dashboards, etc. for an efficient ecosystem and the wastage in the digital channel is much higher compared to other forms of media.

One method to rationalize the ecosystem is through consolidation. That is the impetus of the deal to create MediaOcean. This universal OS with its open APIs will allow other companies with innovative technologies in media or data to plug in and benefit from the efficiency of a unified system. Think of what the iPhone/iOS and Android platforms did for the app development ecosystem.

On their own, the two companies have quickly ramped up a number of new services. For example, supply side platform/ad optimizer Rubicon Project began working with New York-based Donovan on a platform that will serve as a direct, automated pipeline that will allow agencies to access publishers’ inventory with a few clicks-and, they hope, unlock the 90 percent of display advertising that is not transacted through real-time bidding.

And in April, Chicago-based MediaBank bought demand-side platform called AdBuyer, its third acquisition as it worked to expand AdBuyer’s cross-channel capabilities across all major media, not just the web.

Terms of this deal weren’t disclosed and it will still need to pass regulatory muster. Speaking of which, Google is waiting for its proposed $400 million purchase of supply side platform AdMeld to get anti-trust clearance as well. In the meantime, expect a lot more consolidation in the ad tech space.

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