Archive for June, 2012

Brand.net acquired by Valassis

Today it was announced that Valassis Communications, Inc. (NYSE:VCI), a leading media and marketing services company, acquired Brand.net, a leading advertising network focused on global brands. Valassis has long been a leader in delivering direct mail, newspaper inserts and in-store advertising to consumers.

With the addition of Brand.net, Valassis will now be able to sell and execute integrated offline and online marketing campaigns. This is a capability that its CPG and retail customers have been thirsting for. And, now, Valassis is in a prime position to lead the market with integrated offline and online cross-channel marketing campaigns.

This transaction exemplifies two trends noted in our recent blog post The Golden Age of Advertising Technology. One such trend is the application of technology to upper funnel solutions, namely brand advertising. This is a critical capability if the digital sector is to grow share of here-to-fore elusive brand advertising spend. The other trend is the emergence of “cross channel” advertising. While most digital media practitioners think of cross channel as combining two or more digital channels such as search and display, display and Facebook, or display and video, etc., the opportunity is much larger than that. Traditional advertising still dwarfs digital advertising in terms of actual spend; however, digital marketing is now recognized as an effective channel critical to a company’s overall marketing strategy.

Congratulations to both Brand.net and Valassis!

LUMA Partners advised Brand.net in the transaction.

The Golden Age of Advertising Technology

Ad tech is over. The landscape is overcrowded, venture capitalists have moved on, and real action is elsewhere in tech.

If you work in and around the digital media industry you have likely heard this refrain. Nothing could be further from the truth. In fact, I could make the case that we are entering a golden age of ad tech. Though ad tech may not be the right descriptor since much of the data-driven technologies effect marketing in general, beyond advertising. Other areas like content management, marketing and distribution, CRM, ecommerce, even product design are being redefined by the manipulation of consumer data. Sure the ecosystem is fragmented and requires rationalization and consolidation. Venture money has tightened as well which is actually a good thing—it is forcing the capitulation of companies that can’t make it independently (which is in full swing), creating more capable scaled players that will build comprehensive solutions for marketers and publishers that ultimately benefit the consumer.

There is huge opportunity that leverages the application of data-driven technology to marketing and media. Here are seven trends that bode well for the ad tech sector:

1. Big Data Science. Lots of players in ad tech leverage data: every DSP, DMP, SSP, Ad Network and lots in between. However some companies have built very scalable data architecture with sophisticated technology stacks that are showing real results that stand to fundamentally improve the effectiveness of digital marketing campaigns. It is these companies that are changing advertising from a discretionary expense to a cost of goods sold (and in some cases a revenue driver). Examples include Criteo, Rocket Fuel, Quantcast, Turn, Aggregate Knowledge, Bluekai, Media6degrees, AppNexus, [x+1] and Metamarkets.

2. Perfecting Down Funnel. The growth of media bought in real time has been incredible—from next to nothing in 2009 to an estimated $2 billion in 2012 and projected to grow at 50% annually thereafter. Much of this is direct response advertising targeting a particular audience with some of the best ROI coming from retargeting. While this is likely to continue, I can’t help but think that retargeting largely addresses the symptom, not the underlying issue: lack of conversion on the marketer’s website. Recently, innovations around content personalization and cookie integration have materially improved conversion on the initial visit. Examples include Monetate, Rich Relevance, MyBuys, ChoiceStream, Intent Media and Baynote. Whether the customer converts the first time or when found later on, this part of the digital ad world is humming.

3. Moving Up Funnel. While lots of innovation is happening down funnel, there is a palpable rally cry for technologists to focus on brand objectives that are so needed to capture an even greater share of advertising budgets for the digital channel. Example companies include Solve Media, Moat, Brand.net and Flite, and even Google has surprised some by announcing initiatives aimed at upper funnel goals. On the supply side, technology is being applied towards helping publishers sell their premium inventory, both direct and indirect. Example companies include Yieldex, Maxifier, Legolas, Operative, FatTail, iSocket, and ShinyAds.

4. Social CRM. Social data and conversations are becoming a critical aspect of customer relationship management. The past few months have seen a rash of deals where SaaS players (so far Adobe, Oracle and Salesforce.com) have made moves to acquire capabilities to enhance their social marketing. If social turns out to be such an important a component to CRM and media buying, expect many more deals. Other companies in the space include Syncapse, Wildfire, Spedfast, Shoutlet, Adaptly, Unified, GraphEffect and Taykey.

5. Mobile. This is the year of mobile. Seriously, this long espoused tag line may finally be true. Device proliferation and changing consumer habits towards uses of mobile connected devices (driven largely by the iPad) are rapidly accelerating the mobile marketing opportunity. We are now seeing mobile-first applications and formats designed for non-PC devices. If the valuation of Millennial Media is any indication of investor desire for exposure to the sector, expect more activity. Interesting companies to watch include InMobi, Jumptap, Mojiva, Flurry, Medialets, Crisp, Celtra, MoPub, Zumobi, Tapad, Pontiflex and Appssavvy.

6. Digital Video. The intersection of digital and TV is an alluring one, based largely on the huge spend by major brand advertisers (over $70 billion in the US alone). Innovative companies are fashioning solutions that help with the distribution, monetization and analytics of digital video. This will continue in the hopes that at some point the current TV distribution cabal is upended. Notable companies include Adap.TV, BrightRoll, YuMe, Simulmedia, Videology, Visible World, Invidi, BlackArrow, Visible Measures, Tubemogul, Unruly, Sharethrough and Bluefin Labs.

7. Cross Channel. While many companies are busy optimizing media within a particular channel, today’s CMO has a broader issue. She needs to leverage data sources from all channels and optimize—and measure—marketing spend holistically. As offline data becomes more usable and all media channels become digitally addressable, this is the Holy Grail. Of course once the optimal mix is determined based on what works, this becomes a lead-in to implementation—undoubtedly a coveted strategic role. Examples of companies include MarketShare, ThinkVine, Visual IQ, Convertro and Networked Insights.

One of the consequences of a fragmented ecosystem with few barriers to entry is that innovation comes from all over. For leading companies in the sector and new entrants forging opportunity, that usually means that inorganic growth options are the best alternative versus cumbersome build alternatives. We are well into a wave of consolidation that is likely to continue for some time. Sure there are capitulation deals where a stronger private player picks up another (recent examples include 33Across/Tynt, SAS/aiMatch, DG/Peer39, OpenX/LiftDNA, PubMatic/MobSmith and Syncapse/Clickable) but this is healthy for the ecosystem. What is more interesting is the expanding universe of buyers. Besides the usual suspects (Google/Admeld, Google/Meebo, Yahoo/interclick, ValueClick/Greystripe), there are large players from other sectors from media, marketing, software, data and communications that are interested in ad tech capabilities. We have recently seen acquisitions by software giants (Adobe/Efficient Frontier, Oracle/Virtrue, Salesforce.com/Buddy Media, IBM/Coremetrics), with many more in the wings eyeing the sector (SAP, Accenture, EMC, HP, Dell, Acxiom, Experian, Comcast and AT&T) not to mention large players on the sidelines (Amazon, Apple, Samsung). And of course there is now Facebook with a currency and a need to grow their advertising business. Expect lots of activity.


This post originally appeared on Adexchanger.

The Gaming LUMAscape

The much-anticipated Gaming LUMAscape is out. When we released the original set of LUMAscapes in 2011, they covered the major sectors in digital media – search, display, social, mobile, video and commerce – leaving one category to follow: gaming. Just a few years ago, gaming would have been considered a niche category within digital media (but then again, so would social). However, since then gaming has exploded. There are still the traditional “gamers” playing sophisticated console-based or massively multiplayer online (MMO) games. Now, gaming is a mainstream activity, with the masses adopting simpler games that leverage social interactions or the convenience and accessibility of mobile games (enabled by the growth in smartphone adoption).

And that is not all. Enterprises have recognized the value that games can provide when used in the right context and applied to their workforce or customer base. With “gamification” built into their digital frameworks, products and processes, enterprises have realized that the inherent nature of games – including competition, rewards and status – can motivate employees and customers to act in ways that drive positive outcomes for their businesses.

The time consumers spend online is largely spent: searching, sharing, viewing, buying – and playing. With the release of the Gaming LUMAscape, we now feel we have these activities properly represented. However, we note that our LUMAscapes are not perfect, but are a starting point of a continual work in progress. If you have any comments or suggestions, please email us at LUMAscapes@lumapartners.com. Thank you for your help.