More Digital Ad Deals Ahead

One word sums up the recent burst of acquisitions in the internet-advertising industry. It's not strategy, and not synergy. It's fear.

Brian McAndrews, president and C.E.O. of aQuantive, which is in the process of being swallowed by Microsoft, said acquisitions are a form of insurance against rapid change in the industry. As such, he told an industry group, expect more takeovers soon.

When an industry's future is as uncertain as digital advertising's is, he said, "you want to make sure you have a collection of assets to kind of prepare yourself for a lot of different eventualities...

"Different players are saying, 'Where's this going? It's new and different, I'm going to make a bet here, I'm going to make a bet there,'" McAndrews added. "So I think you're going to see a lot more of that."

McAndrews was in New York from his Seattle base to address the American Association of Advertising Agencies' first-ever digital conference.

In addition to Microsoft's takeover of aQuantive--a holding company comprising several digital marketing and design companies, including Avenue A Razorfish, which worked on Portfolio.com--the advertising giant WPP bought 24/7 Real Media and Google gobbled up DoubleClick, all within six weeks in April and May.

All the deals have caused a little fear in others: Fear of a dominant market player, which is why federal antitrust authorities are reviewing the Google-DoubleClick deal. And fear of conflict of interest, as in the aQuantive acquisition. After all, MSN sells what aQuantive buys.

McAndrews said the potential for conflict was manageable because they've already been successfully managing conflicts. He said aQuantive maintains separate management and strict data confidentiality rules, for example. But also since it's so easy to track how consumers use the Internet, so a company couldn't secretly favor one vendor over another: Its clients would quickly know if you were not treating them equitably.

If it's true that the more services the behemoths can provide, the more fit they'll be to survive, can they ever be fully insured?

Well, there's always Murphy's Law.

by Willow Duttge