The fusion of ad tech and martech has already seen Adobe acquire video specialist TubeMogul for $540 million, Salesforce buy data management platform Krux for $700 million and Oracle purchase measurement firm Moat for $850 million. Now IBM is poised to accelerate the race for advanced-marketing budgets, testing the services of ad-buying platform MediaMath with an eye toward a possible purchase, according to three people familiar with the situation.
A deal isn't certain, and IBM and MediaMath say they "do not comment on rumors or speculation."
But marketing is witnessing "the convergence of ad tech and martech," says Scott Brinker, the widely followed editor of chiefmartec.com. "We've seen that with Oracle and Moat, Salesforce and Krux, Adobe and TubeMogul, and so on. While there were historical reasons why ad tech and martech grew up in different silos—often agency versus in-house technology stacks—brands today want to orchestrate and instrument the whole end-to-end customer journey, from digital ad campaigns through on-site and on-premise experiences. They need their data to be unified across these different channels and touchpoints, and they want to work with service providers who can strategize and execute across them in an integrated fashion."
That's why rivals such as Adobe have assembled an offering that lets marketers buy display, TV, mobile and even audio ads. Adobe Advertising Cloud also allows customers to use Sensei, its AI offering, to make ad buys using automation. Without an ad-buying platform such as MediaMath, IBM can't give its clients the same thing.
Since last fall, however, IBM has been providing MediaMath with analytics and access to Watson, making it the exclusive platform where marketers can use those tools to purchase ads. MediaMath has been showing off its ability to integrate nonprogrammatic channels such as email or website experiences to the tech suite it offers brands. Pairing the cognitive abilities of Watson with MediaMath's full capabilities could allow marketers to create millions of customizable ads that reach a consumer on the right device, at the right moment with the right message. At least that's what the companies' current partnership is meant to prove or disprove, according to people familiar with the project.
If successful, it could provide a huge boost to IBM, which reportedly has yet to turn a profit on its highly touted Watson technology. (An IBM spokesman declined to comment on Watson's profitability.)
Former MediaMath exec Tony Katsur, now senior VP of platforms at Nexstar Digital, says an acquisition of MediaMath would be "IBM's watershed moment to move from back office to front office." Katsur helped build MediaMath's platform as well as its engineering, product and client services; he does not have a stake in the company.
The market is hungry for an alternative to Google, Katsur says. IBM's technology and consulting heritage combined with Watson means buying MediaMath would give it "the opportunity to create an AI-driven marketing operating system rivaling all digital," Katsur says. "IBM's legacy IT relationships with Fortune 500 brands allows them to capitalize on an already trusted relationship."
Greg Paull, co-founder and principal at marketing consultancy R3, says a demand-side platform like MediaMath would give IBM the chops to support its 2016 acquisition of digital marketing and creative agency Resource/Ammirati. That deal revealed IBM's vision of providing full-service digital offerings to chief marketing officers, as Paull sees it.
MediaMath has said it is profitable and counts as clients GroupM, Havas, L.L. Bean, Coke and Dell, but hasn't brought in new funding since 2014 or helped investors cash out through a so-called liquidity event in nearly 10 years. IBM iX, IBM's advertising unit, ranks as the world's 10th-largest agency company.
"The MediaMath move would give them a far more complete solution," Paull says. "It'd be a seismic move for both sides."