• by Joe Mandese  @mp_joemandese, September 25, 2011

Donovan Data Systems and MediaBank, the two dominant and fiercely competitive suppliers of advertising and media-buying processing systems to Madison Avenue, have agreed to merge into a new company called MediaOcean, which will be led by Donovan founder Michael Donovan and MediaBank CEO Bill Wise, who will serve as executive chairman and CEO of the new company, respectively.

The merger, if approved by regulators, would dramatically consolidate the marketplace for ad agency data processing systems, leaving Comcast-owned Strata as the next-biggest player.

Although Donovan and MediaBank spent much of the past several years badmouthing each other's products and services, the companies said it made more sense to merge than to compete, because the economies of scale would enable them to develop even better systems and products than if they were independent competitors. They said the talks began about six months ago, and that most of their bigger clients knew of and approved the deal before it was announced.

Both companies described it as a true merger, noting that the resulting board of MediaOcean would have an equal number of board members drawn from each company.

Both companies have existing long-term contracts to service agencies with various systems and products, which will remain in place, even as the new MediaOcean embarks on a new initiative to develop an "OS," or operating system for the ad industry.

Dubbed the MediaOcean OS Project, the companies said the new system will "encompass common standards, open platforms and universal APIs, to enable any agency, media seller or third party to seamlessly integrate with each other as well as with the MediaOcean systems."