The world's biggest advertising buyer says there's going to be a huge ad tech 'shake out'

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irwin gotlieb

WPP

GroupM chairman Irwin Gotlieb speaking on video link at WPP's H1 earnings presentation.

If it wasn't already looking grim for ad tech companies, the next 12 months could be even worse, according to Irwin Gotlieb, the chairman of the world's biggest media investment agency GroupM.

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Aside from the huge Wall Street plunge earlier this week, ad tech stocks had already been cratering this year. The trepidation around the sector means there hasn't been an IPO in months.

Speaking on GroupM owner WPP 's half-year earnings presentation, Gotlieb said the ad tech industry is in the middle of "a very interesting shakeout."

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At the heart of the turbulence is "key media owners who are focused on a walled garden strategy, becoming ever more protective of their data sources," according to Gotlieb.

He noted Google, which earlier this month confirmed it will stop marketers buying YouTube ads via third-party companies through the DoubleClick Ad Exchange. This is an example of that "walled garden" approach, with media owners basically saying: "If you want to want to buy ads on our properties, you have to use our ad tech too."

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Gotlieb said: "Most of our competitors are very reliant on Google tech and use the Google tech stack as their primary source. We obviously do not [WPP has a significant stake in the industry's largest independent ad tech company AppNexus.]"

Meanwhile, Facebook is looking to own every part of the ad tech stack, both on Facebook's owned properties and beyond - serving advertisers with Atlas and its Facebook Audience Network, and publishers with its LiveRail product. And cloud computing companies like Adobe, Salesforce, and Oracle have been steadily moving into the ad tech and marketing tech space too. All these pressures are compounding against ad tech companies, and not every business will be able to overcome them.

Gotlieb: "I really believe that those entities that don't have real technology and real data assets that they own and control will show some vulnerability over the course of the next few years. And we will see just how tall the walls will become on the walled gardens that are out there."

WPP CEO Sir Martin Sorrell added that there's a major opportunity for independent platforms that aren't heavily reliant on one data source. He said: "I think clients are starting to look at online and say to themselves 'Where am I getting the value, verification, and measurement?' Verification has come more and more to the fore."

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