E-commerce Acquisitions

In the last few weeks, we saw a couple interesting acquisitions in the ad tech space signaling a shift towards increasing focus in the retailer space. This included Xaxis purchasing Triad Retail Media and Criteo buying Hook Logic.

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Xaxis is part of WPP. It is not an agency trading desk, but rather a technology platform that, among other things, creates technologies that optimize digital audiences and takes forward positions on media to ensure prime positions - including putting its own header bidding solution on publisher pages, owns creative tools, etc. When an agency buys media from Xaxis, the actual price of the media is generally not transparent - but they are not just getting the media, they are getting the full suite of Xaxis's offerings. Triad is a solution that creates advertising for ecommerce sites. They work with many of the largest ecommerce platforms except Amazon, and work not only to effect remnant monetization, but also to create on-site experiences / microsites. For example, if Iams pays Walmart to promote its products on walmart.com, Walmart may create a special Iams microsite with unique content, which is promoted various across walmart.com, all powered by Triad.

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Criteo's primary product is personalized retargeting - meaning it shows you ads for things that you looked at but haven't purchased, everywhere that you go. Hook Logic provides retail companies with tools to allow brands to buy highly targeted ads for customers on the actual retail site. For example, if you search for DSLR cameras on a camera website, the camera website can work with Hook Logic, which in turn might work with Nikon to create a promoted listing on the top of the search results that would return the ad for the Nikon product. This would allow the ecommerce site to make money on the ad, and make money for the fulfillment of the product - effectively dynamic slotting fees (which we discussed in the past here: Slotting Fees)

Both of these acquisitions speak to the desire of advertising technology companies to close the loop between marketing and sales. Both Xaxis and Criteo have plenty of technology to help retailers expand their footprint through advertising technology. As retail continues to move online, ecommerce companies are increasingly the gatekeepers of commerce - which, of course, is the ultimate goal of advertising. In these transactions, the advertising technology companies are buying closer relationships with the retailers. They bring money and a share of advertising - and get a possibly-exclusive inventory. All this speaks to the ever-growing importance of retailers in an era that will be defined by digital commerce. They are platforms that spend to drive users - and also the platforms that brands must use to actually fulfill orders. Advertising technology solutions that empower these retail platforms will - the bet is - have powerful positions as digital commerce evolves. Looking at China, Alibaba - one of the largest companies in the world - draws a substantial percent of its revenue through advertising on ecommerce. It is likely that we will see this become a larger and larger segment through the rest of the Western markets.