How Hot Can It Get? M&A
The tradeshow floor is hotter than a bikram yoga session (in more than one sense), but does this mean we are in an overheated market? How many “we are just like YouTube” pitches can the industry support? Are we on the edge of a cliff, about to plummet again?
These are some of the questions Jay Weintrob, Director of Corporate Strategy for Oversee.net, Clif Kurtzman, Ph.D., CEO of ADASTRO Inc. and Bill Morrison, Director, Senior Research Analyst of JMP Securities LLC. attempted to answer in the ad:tech New York 06 session “The Economics of Interactive: Industry Investment and M&A for Fun and Profit.”
In summary, this crowd was very bullish on the sector.
Morrison stressed we are in a much better position than in 2000. Google, for example, has only 2/3 the market cap of AOL’s at the peak of the last bubble. Overall, valuations are still well below dot com madness, and are easier to justify. Firms going public are more likely to be profitable than in the past, and management appears more mature. For those looking to acquire, a quick tour of the ad:tech conference floor reveals a crowded market, ripe for the picking.
Kurtzman then took the floor, laying out the potential buyers, weighing each one’s success in navigating the opportunities. Google is still the industry darling; the YouTube acquisition proved that it can play at the highest level. Yahoo!, eBay, Newscorp, Viacom, Microsoft, IAC and the rest of the lot were dismissed for being slow to recognize and employ disruptive technologies.
So what to keep an eye out for? Kurtzman suggests that mobile, search and gaming are still hot. Community that disrupts the Web 1.0 world, as well as other Web 2.0 technologies are also choice picks, as is technology that leverages the ubiquity of broadband. Global efforts and superior personalization round out the list.
To wrap it up, Kurtzman wisely pointed out that the industry’s evolution is no different than any other evolution: Rapid diversity gets hit by big rocks. Species go extinct. The survivors then set forth a renewed cycle of rapid diversity. The message, therefore, is to be a smart survivor by focusing on hiring the best people, building brand, developing relationships, scaling the business model and when possible, maintaining proprietary technology.
