Sizmek’s travails and walled gardens’ performance hint at adtech’s path to growth

The Drum 12 Jun 2019 04:16

Given Facebook’s history when it comes to consumer privacy and policing content, you might question Mark Zuckerberg's sincerity when, during Facebook’s annual shareholders’ meeting, he expressed the need for more government regulation.

I, for one, am willing to take him at his word. I do so not because I’m naïve, but because I think we have reached a major inflection point where the tolerance for issues surrounding the dominant platforms like Facebook and Google have reached the boiling point.

The drumbeat for regulation of big tech has come from the likes of former Obama Federal Communications Commission Chairman, Tom Wheeler, and Democratic Party presidential hopeful, Elizabeth Warren, who advocates the break-up of big tech and even bought a campaign billboard in San Francisco to that effect.

While it wouldn’t be surprising if Mr. Zuckerberg’s openness to regulation is simply a PR move to appease these strident, influential voices, it should also not be a surprise if there is a baseline of sincerity, including his endorsement of data portability. Perhaps, he’s finally come to the sobering realization that Facebook fully realizing its marketplace potential may require a more self-critical and corrective lens.

I believe we have an opportunity to rewrite the current narrative of uncertainty in favor of a second chapter marked by growth and more credibility.

As a European, I’m accustomed to a stricter regulatory business environment, so all of this saber-rattling in the US is not new to me. While many of my American colleagues may recoil at the thought of increased regulation, the net effect, I predict, could be salutary for the entire marketplace.

The adtech sector has also experienced consolidation and diminished funding as the pendulum has swung further in the direction of the walled gardens. The irrational exuberance that governed much of the adtech funding during the past decade led to the propping up of shallow point solutions that ultimately didn’t deliver value while contributing to the complex, bloated supply chain.

One needs to look no further than the recent news about Sizmek. While nowhere near as big as the walled gardens, the company had achieved a relative level of scale that was the envy of many companies that have been consolidated. Yet, here we are in 2019, with Sizmek rescued from bankruptcy by Amazon, and with many predicting the deal as Jeff Bezos’s way to more fiercely compete with Google.

As adtech players bemoan the dominance of the walled gardens, the irony is that the blueprint for relevance and success has been forged by Facebook and Google, who at their core, are companies that are intent on one thing: performance.

Christophe Collet is chief executive and founder of S4M

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