Advertising-technology rivals Donovan Data Systems and MediaBank have announced plans to merge into a company called MediaOcean, pending approval by the Department of Justice, amid encroachments from other tech companies such as Microsoft, Google and Yahoo.
For years the companies have offered the ad industry competing systems for essential processes like booking ad space and time, ad verification, billing and the like. The merger, which comes as both companies look to expand their digital services and global share, would also create an open, standardized platform where others could develop ad-tech services.
"We came to the realization separately that we weren't relevant in new media and we both needed to make significant investments," said MediaBank CEO Bill Wise, who will be CEO of the merged company. "When we bumped into each other on the street , as we were separately trying to raise money to fund development in this area, we realized that together as partners we'd win."
DDS founder and chairman Michael Donovan will assume the role of MediaOcean executive chairman if the deal is approved.
The open operating system, dubbed "The MediaOcean Project," would enable developers anywhere to create system applications -- much like the API on social platforms like Foursquare and Facebook, which allow outside companies to develop Foursquare and Facebook games and other apps. It would also provide more customized advertising services for its customers' clients.
"What we're focused on with the OS Project is to create a level of automation and bring pragmatic buying to everything," said DDS Digital President J.T. Batson, who will become a president at MediaOcean. "We want to go deep in certain product areas, but the big story here is around how we're trying to enable everyone out there who's building technology to plug that in and gain access."
The project could also give MediaOcean a leg up on the competition. DDS and MediaBank argue out that technology players such as Microsoft, Google and Yahoo "have a principal interest on the supply or demand side," while MediaOcean would be an "independent, neutral third-party technology company."
Though the innovation of the platform might help them gain share and voice among giant competitors like Google in the digital systems category, the organization could also lose money from the API model, which will give agency developers free access to build their own systems. The executives said it's too early to discuss MediaOcean's revenue approach surrounding the open API.
Major agency customers include agencies within WPP's GroupM and Publicis' Starcom Mediavest Group, as well as IPG and Omnicom shops. One agency customer said that it favors the merger and isn't concerned with a potential antitrust issue following conversations with both organizations as well as with the Department of Justice.
The large holding company that neither of these organizations supports is Japan-based Dentsu, which has a relationship with competitor Harris Corp. Although they don't immediately expect to take on competitors' clients, the Asia Pacific region will be a big focus for MediaOcean, according to Mr. Wise.
The organization will continue to offer core applications including national and local TV, print, out of home, radio, digital and creative workflow management. Moving forward, the team is looking to invest in organizations that provide "back-office" digital services the executives liken to tasks such as sending invoices, as opposed to the "front-end technology" services such as targeting and optimization.
"Without the context of what we're doing this seems like two dinosaurs getting together for one last dance; it's a perception out there," said Mr. Wise. "We're taking this personally. We want to be a relevant advertising technology company in the new age."