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@ Ad Week ’07: The Advantages Of Consolidation

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Just made a quick sprint from OMMA’s Ad Week conference at the Hilton New York to the MIXX 2.7 Conference at Crowne Plaza Hotel to hear the NY Times’ Saul Hansell moderate a panel consisting of participants in the past year’s interactive ad agency buyouts, including executives from DoubleClick, 24/7 Real Media, Right Media and aQuantive unit Atlas. Hansell started out asking what the benefits of their respective combinations will bring to both companies that couldn’t have been achieved separately and moved on to survey the panelists as to whether regulators should approve the pending $3.1 billion merger of Google (NSDQ: GOOG) and DoubleClick:

Michael Walrath, founder and CEO, Right Media: “Our combination brings greater liquidity. What we didn’t have before Yahoo (NSDQ: YHOO) was the leading position in terms of search that Yahoo does. We did have th relationships with advertisers and publishers. What you’ll see is more ads, greater ability to target than before.”

David Moore, chairman & CEO, 24/7 Real Media: WPP Group [which bought 24/7 for $649 million] does business with 497 of the fortune 500. “That gives us access, which we can extend to advertisers. If we can help deliver ROI, that will grow both our businesses exponentially.”

Karl Siebrecht, president, Atlas: The $6 billion marriage of Microsoft (NSDQ: MSFT) and aQuantive means more innovative measurement technologies.

David Rosenblatt, CEO, DoubleClick: “Greater liquidity is the result, not just of our deal, but all these deals. You ask advertisers what the biggest challenge is, and they say the absence of standards and the scale to make ads economical. What ends up happening with all these deals are greater pools of liquidity, in the way that larger stock exchanges allow certain problems to be solved. Being able to do all the things, such as targeting and measureability, that made search such an adverting growth medium will be transferred to display.”

— The panelists expressed alternating degrees of discomfort and amusement at being asked whether regulators should approve Google/DoubleClick. Among the responses:

Moore: After a tortured beginning, the 24/7 head ultimately decided that the deal should be approved “with restrictions.” What sort of restrictions? “The free market abilities to do anything the want should be restrained,” he said to audience laughter.

Siebrecht: Microsoft’s position is that the market concentrations are cause for concern. If one player gets too much control, and then has “the ability to extract rent to keep other players out of the market, that’s something regulators should consider.”

Rosenblatt: “To think that Google and DoubleClick would make this market less competitive stretches credulity.”

Walrath: “Ad serving is clearly a commodity. As far as the pricing of ad serving, there were rumors that Google would offer it for free. When it’s bundled with something, everyone knows that’s not free, that’s just different pricing.”