Much has been written about audience targeting, programmatic buying, real-time bidding, data management, etc., showcasing impressive advances made in advertising over the past few years. But marketing isn’t just about advertising – that is just one element of the marketing equation. The CMO is tasked with many more responsibilities, including sales enablement, corporate and product branding, marketing mix allocation, website performance and management, not to mention the earned media and social media channels. Along with advertising, these functions are increasingly intertwined around data sets.

In advertising, while still early, we are finally starting to see organizations adopt multi-channel strategies, starting with media mix modeling, followed by executing integrated advertising campaigns and finally measuring the effectiveness through attribution. Similarly, online businesses have been improving the linkage between acquiring visitors and converting those visitors to customers through greater personalization of content and offers. Marketing technologies, like ad technologies, have been advancing rapidly in recent years, enabling marketing organizations to operate more efficiently and effectively as well as to improve the customer experience. So think MarTech, not AdTech, for the fuller picture.

In recognition of this broader marketplace, we are introducing the latest in our LUMAscape series: the Marketing Technology LUMAscape. This latest landscape maps out two categories of software offerings: 1) Sales and Marketing software, and 2) Website technologies. The Sales & Marketing section captures the main categories that marketing departments utilize to plan, execute and analyze marketing campaigns. The Website section includes the technologies to create, manage and optimize websites.

Once again, we note that our LUMAscapes are not perfect but rather a continual work in progress. If you have any comments or suggestions, please email us at LUMAscapes@lumapartners.com.

The last week of January saw a trio of announcements that may well be a harbinger of the future of the ecosystem. On January 24th, MediaMath announced the acquisition of Akamai’s ADS (Acerno) business. On the same day, AppNexus announced a $75 million all-primary financing round from TCV. And on January 28th, AdBrite announced that it was shuttering operations.

These are all good signs.

The acquisition and financing are signs that we are likely to see more deal activity from the scaled private companies as they build formidable war chests and position for a possible IPO. This is a natural process as the sector matures and the scaled leaders move to garner capabilities across the increasingly interconnected worlds of display, premium display, search, mobile, video, analytics and social. So, besides the expanding universe of interested buyers from the large public strategic companies as depicted in the Strategic Buyer LUMAscape, we now have a tier of scaled private companies as potential buyers:

Activity by this private group would be welcome since the landscape continues to fragment. While not scientific, a review of the Display LUMAscape in December 2012 compared to the December 2010 version showed that 53 companies were acquired but 74 new ones appeared. In effect, we have a game of LUMAscape whack-a-mole!

As mentioned, the other way to de-clutter the ecosystem is failure. Which is why it was good news to hear that AdBrite was shuttering. Don’t get me wrong – we’re no grave dancers, and we mean no disrespect to AdBrite or their investors. But we are long overdue for marginal companies in the advertising technology ecosystem to close. We simply didn’t need an 8th ad exchange! We denote acquired companies on the LUMAscape with a red dotted line. We may need to introduce the black dotted line and shading to denote failed companies.

So with active large strategic buyers, increasingly active scaled private buyers and the effects of a more discriminating private capital market, we might just make progress towards industry consolidation.

As part of the transaction, the two companies have forged a multi-year relationship whereby MediaMath has exclusive rights to leverage Akamai’s pixel-free technology for use within digital advertising and marketing applications. Together the two companies will be able to provide their joint customers with an even more effective set of tools to manage their data, better understand their audience, and help enhance the quality of online marketing campaigns.

Back in 2010, we highlighted the need to combine data management capabilities with media buying to effect a true platform (as in Demand Side Platform). This transaction significantly augments MediaMath’s capabilities and scale.

LUMA Partners acted as exclusive financial advisor to Akamai.

(Download this LUMAscape here.)

Today we are publishing the most important industry map – the Strategic Buyer LUMAscape. Historically, digital acquisitions were dominated by four core companies: Google, Microsoft, Yahoo and Aol. While this group remains relevant, we have witnessed an expansion of the buyer universe as digital business models converge across media, software, services and commerce. This chart shows 150 of the largest relevant buyers of digital start-ups arranged by type, propensity, capability and motivation. Here’s the legend:

1. Type – We have grouped the buyers into four sections: media, marketing, technology and commerce/network.  The last group is a mix of firms that derive large network effects from the delivery of media, communications or commerce.
2. Propensity – The concentric circles denote a buyer’s likelihood of pursuing future digital acquisitions, which is informed by past activity and strategic direction. The closer to the center, the more likely a buyer of digital assets.
3. Capability – The coloration indicates a buyer’s capacity to make sizable acquisitions based roughly on trading multiples. Green is higher than yellow which is higher than red. This slide represents a tremendous amount of buying potential: companies within the circles alone represent approximately $3 trillion of market capitalization and $450 billion of cash and securities.
4. Motivation – The background words denote the generalized motivations of the sector buyers. Most media and marketing companies have been disrupted by digital and are making acquisitions defensively whereas technology companies are buying digital start-ups as an offensive strategy.

These categorizations are generalized and subjective and no doubt have exceptions. The goal of the slide was to graphically depict all the likely strategic buyers of digital start-ups on one page. We anticipate this slide will be utilized in board presentations and investor meetings, and hope it provides utility to the industry.

As always, we note that our LUMAscapes are not perfect but rather a continual work in progress. If you have any comments or suggestions, please email us at LUMAscapes@lumapartners.com.

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.