Regular readers of the IP Asset Maximizer Blog will recognize my previous post which provided an illustration of the predictive nature of patent landscaping to improve business decisions using Cox Enterprise’s $300 Million acquisition of Adify as an example. I wanted to follow up on that post because a recent announcement by Yahoo may demonstrate that, at least in some situations, patent landscaping analytics are so good at predicting future competititve activity that they can operate as a business crystal ball.
In that post, I predicted that Cox would likely experience substantial competition in the vertical advertising space as it seeks to capitalize on its purchase of Adify, and supported this assertion by providing a picture of third party commercial intentions by looking at patent filing data. This prediction was bolstered by recent a Google announcement that it was partnering with NBC-Universal to deliver targeted ads through cable. This was not surprising looking at the patent filing data that signaled significant investment by Google in the vertical advertising market. Moreover, I argued that Google’s activity should be a concern for Cox because a significant strategic purpose of Cox’s purchase of Adify is certainly to generate significant revenue in targeted advertisements to be delivered over Cox’s cable networks.
There was more competitive activity to be predicted from the patent filing data, however. Specifically, Google is not Cox’s only problem: this week Yahoo announced that it was introducing, in Jerry Yang’s words, “revolutionary” targeted advertising planning and buying program called “Apt”. Apt is said to provide the greatly needed service of giving advertisers a more efficient route to more targeted audiences would help hard-hit local publishers. Cox Enterprises is a publisher of several of the “hard hit newspapers” that Yahoo is seeking to service with Apt. Moreover, Apt was announced just one day after Yahoo announced that it was entering into a partnership with Time Warner, which signals that Yahoo is also interested in targeted advertising through cable.
Importantly, Google and Yahoo’s desire to enter the targeted advertising market was fully predictable by a review of the patent landscape data as shown in the below table. Google’s 15 total filings spread out over the course of several years signaled that Google was undeniably serious about competing in this market in a big way, and that it may own dominant rights to basic technology as a result of its acquisition of DoubleClick’s early patent rights. Google’s announcement of its partnership with NBC Universal merely confirmed the validity of the signal shown by its patent filings. Similarly, Yahoo’s 6 filings within last few years that it has recently identified vertical advertising as an area where it wished to own patent rights, a fact that should have signaled, and now is demonstrated by, Yahoo’s announcement of Apt.
The Adify-Cox acquisition should serve as an object lesson for those playing in the M & A space. Before executing on an acquisition strategy where the business goal is to fill a strategic need not currently present in their company (i.e., vertical advertising for Cox), the relevant patent landscape cannot be ignored. In this Adify-Cox situation, one could argue that the patent landscape effectively operates as a crystal ball that demonstrates the amount of competition that Cox will face from other companies in its foray into vertical advertising. While I do not contend that it will always be possible to predict future competition from the patent landscape, I believe that businesses ignore the power of patent data in validating strategic business questions at their own peril.