Today's IPO by Tremor Video is seen by many as a harbinger for the adtech community (full disclosure:  Tremor Video is a Flybridge portfolio company).  Rightly so.  Tremor is the first public offering of an adtech company since Millenial Media's IPO in April 2012.  One can argue how successful the Tremor IPO was, and the broader industry implications, based on the first day's opening price and trading, but the real test of these offerings is what happens next – how companies perform and execute over the next few quarters.

One thing that is clear, though, is that the advertising community would be wise to keep an eye on the "tech" portion of "adtech".  I have argued in the past that software is eating marketing.  Simply put, technology is radically transforming the marketing function and the role of the marketing professional.  The flow of advertising dollars into digital, addressable media is well-documented and well-understood.  It is estimated that in 2013, $100 billion will be spent on digital forms of advertising, representing more than 20% of the total advertising market and continuing to grow rapidly in share  (see chart above).

Less understood is that managing digital advertising is far more complex than its analog counterpart.  Advertising agencies have retained their industry wide hegemony as a result of this complexity.  With so many new technology vendors popping up and so many immature point solutions being deployed, the core competence of agencies has gone from being great at relationship managemnent to being great at technology platform management.  As DataXu's Mike Baker likes to say, Mad Men have become Math Men.

But, in every industry, software improves and gets simpler and simpler.  Technology platforms gain in scale, become more mainstream and training programs become more mature.  As all this happens, agency services are required less and less.

So, the lesson that may get loss in the Tremor IPO hoopla?  Agencies are being transformed.  Technology companies are sweeping into the advertising industry, much like they did in marketing (see Salesforce.com, Eloqua/Oracle, Exact Target/SalesForce, Neolane/Adobe).  And the days of getting the job done with thin technology in combination with armies of bodies are over.  To be a valued, strategic player in the market, you had better have a thick, differentiated technology stack.

Think about all of the amazing technology innovation that has impacted businesses over the last three years.  Since 2011, we have seen an explosion in cloud computing, in mobile, in technology-enabled business services and in globalization.  All of us feel more productive as professionals and our businesses feel more productive instutionally.  As a nation, the US must be cranking in productivity.  Killing it — particularly after rebounding from a recession, right?

Now look at the latest US productivity statistics (Q1 was just released last week):

• Q1 2013:  0.5% (annualized)
• 2012:  0.7%
• 2011:  0.6%

In other words, despite three years of amazing innovation and growth, we don't seem to be gaining in productivity.  What's going on?  

In 1986, observing a similar phenomenon on the heels of the PC revolution, MIT Economist Robert Solow quipped:  "You can see the computer age everywhere but in the productivity statistics."

Those of us that are immersed in the innovation economy may find this hard to believe, but we are not, as a whole, actually more productive when we are in the midst of an innovation cycle boom.  New technologies take time to absorb, refine and make mainstream.  Computer software can be reprogrammed quickly.  Humans can't.  

Forrester captured this phenomenon nicely in a chart they produced a number of years ago predicting "the next big thing" in computing:

We can't imagine a world without broadband wireless, iPhone 5s, iPads and the cloud.  But we've got a lot of work to do to absorb these amazing technologies and make us all more productive as a whole.