Digital Gold Rush

Google isn't alone among the digital giants swallowing up online marketing properties. More than $33 billion has been spent in an ad-industry-focused merger and acquisition spree during the first half of 2007, Advertising Age reported in July. Microsoft, Yahoo!, Time Warner, ad giant WPP, and, of course, Google were among those spending big bucks to acquire firms that collect, analyze and target us largely via stealth and highly sophisticated interactive ad technologies (adding to their empires such interactive marketing entities as Tacoda, BlueLithium, Third Screen Media, and aQuantive).

The growing consolidation at the core of the digital media business, ultimately will result in a handful of companies controlling the revenues for all of online media--blogs, social networks, search engines, mobile communication and (especially) news and information sites. This should be of concern, especially to progressive idealists who hoped that the Internet could pose a challenge to the "old" media monopoly. Today Internet users benefit from an incredibly diverse array of content to reach niche audiences through so-called "long-tail" distribution. However, there is a real danger that the hundreds of billions now being spent by the corporate giants and venture investors will significantly undermine the democratic potential of digital media.

This new digital gold rush by the established media companies and and newer players (think Rupert Murdoch acquiring MySpace) to acquire key online, mobile, and digital video outlets reflects an understanding of how our media system is fundamentally changing. Young people around the world are increasingly accustomed to consuming their media in small bites, at home, or on the street. They wish to create and distribute their own content as well, increasingly through social networks, willingly sharing personal information with a global audience. The marketing industry has responded to these changes by developing new approaches to branding and selling.

Ad industry consolidation and corporate strategic alliances are designed to create a marketing system where each of us can be scooped up in the digital marketing net wherever we are: using search, viewing online videos, communicating on social networks, texting or talking on our mobile phones. In addition, advertisers have unleashed new approaches designed to get consumers to embrace brands by creating corporate ads themselves and then virally pass it on to friends (such as the highly successful Dorito's "Crash the Superbowl" contest last year).

Interactive advertising offers marketers the ability to measure how each of us engages with ads and entire campaigns: Each one of our clicks, pageviews, mouseovers, and searches is recorded, compiled and analyzed. Interactive advertising generates nearly $17 billion a year in revenues in the US already; some analysts suggest that by 2011 it will exceed $80 billion annually in this country alone. And as all marketing eventually goes interactive, the companies dominating the advertising market will have tremendous political and economic power, including over the production of news.

A new report by the private equity firm Veronis Suhler Stevenson (VSS) predicts that by 2011, online media will "replace newspapers as the largest ad medium." Such an impending transformation raises key questions about the viability of our already fractured and conglomerate-driven news media system.

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