A couple of weeks ago we heard the news that Facebook acquired Atlas for the sum of $100M. Atlas is primarily an ad serving platform born from the agency Avenue A (aka Razorfish), who wanted to develop an in house tool to manage their online display buying. During the early noughties Atlas quickly became a company of its very own, parented by aQuantive. It was Google’s acquisition of Doubleclick for $3.1BN that prompted a swoop from Microsoft in 2007. They paid $6.3BN for aQuantive to the jubilation of its shareholders, getting an ad server (Atlas), an agency (Avenue A Razorfish) and a network (Drive Performance Solutions). It remains one of the most significant media acquisitions of the last 20 years. Not just because of the eye watering over valuation, but also because it cemented the battle of the giants, Microsoft was making it clear it was in the game of advertising (see Ballmer’s hilarious 2006 speech at the Razorfish client summit).
At Atlas’s height it had about 50% market share of the agency sector in the US, but under Microsoft it suffered in spite of some grand ambitions. Whilst Google developed DFA into a fully integrated media platform, bolting on media planning tools, creative optimisation technology and rich media solutions, Atlas, rebranded Microsoft Advertising Solutions, stayed stagnant. Its 50% market share in the US is probably more like 15% now, and continuing to fall with newer more flexible technologies like Flashtalking eating Atlas’s lunch. What Google had that Microsoft didn’t was a ready and waiting army of engineers able to repurpose and improve DFA. This wasn’t Microsoft’s area of expertise and it showed.
Aside from the deservedly paltry valuation ($6BN to $100M in 6 years!) Facebook have come out planning “to improve Atlas’ capabilities by investing in scaling its back-end measurement systems and enhancing its current suite of advertiser tools on desktop and mobile…with the goal of making [it] the most effective, intuitive and powerful ad serving, management and measurement platform in the industry”. These are big bold statements which last year I might have been more enthused by. Atlas had its chance to shine under Microsoft and failed. Why rehash a fifteen year old piece of tech when you could probably build something better from scratch? For $100M Facebook could have built an incredible social media measurement and optimisation tool.
We’ve all watched with admiration at the way Google has made some canny acquisitions over the last 5 years, bolstering its paid advertising capabilities in buying Admob, Teracent, Invite Media and AdMeld. As Terence Kawaja points out in his IAB networks and exchange keynote, Google is now “In virtually every single component of the ecosystem” and has the paid media game wrapped up. Atlas is a lesser attractive component of this same ecosystem, why would Facebook want to play here when the opportunity is surely in earned or native advertising? I would have thought the content discovery potential of Outbrain or social media measurement sophistication of Adaptly might have been more suitable acquisition ad platform candidates. As yet nobody owns the native space in the way Google owns the paid space. Facebook have a short window of time to create and own the native advertising ecosystem and all their energies and funds should be focussed here. Not on some outdated paid media technology which will almost certainly suffer the same fate that it did under Microsoft.
Nathan Levi is a contributor at The Makegood and the Head of Media at VCCP, a media optimization company.