luma's state of digital media at dms 16

LUMApresentsourannualStateofDigitalMediawhichcoversourviewsonthemarket,theindustrytrendsandthefutureoftheecosystemwithaspecificfocusondigitalmediaandmarketing.Wehopeyouenjoyit.

Meet the Senior LUMA TeamTerryKawaja BrianAndersen MarkGreenbaum DickFilippini GayleMeyers

FounderandCEO Partner Partner Partner CMO

Terryleadsstrategy,bankingandcontentforLUMA.

He’salsoheadcomedywriterandperformer.

BrianisLUMA’smarketingtechnologyguru.

He excelsatcoachingbothlittleleagueandbigclients.

Mark runsM&AstrategyandexecutionforLUMA.

He’snevermetatermsheethecouldn’timprove.

Dick leadsLUMA’smobileandgamingbankingcoverage.

YoucanfindhimholdingcourteveryFebruaryinBarcelona.

GaylerunsLUMA’smarketing,events,andpartnerships.

Shemaybenew,butshe’s alreadyformidable.

Digitaladvertisingisdoinggreat.Revenuegrew20%in2015andissettosurpassTVadvertisingnextyearasthelargestcategoryofadspend.Butyouwouldn’tknowitfromthepress.Everywhereyoulook,allyouhearaboutaretheproblemswithdigitaladvertising.It’snosecretthatthesectorsuffersfromafragmentedecosystem(asdepictedbyoureponymousLUMAscapes)andsuchaconvolutedsupplychainhasbeenblamedforaseriesofissuesthatplaguethesector.Theseissueshaveimplicationsforallthekeyconstituentsfrommarketerstoagencies,techintermediaries,publishersandconsumers.

Weforcerankedtheissues fromthestandpointoftheirimpactontheecosystemasawholewithincreasingimportancefromserioustocriticaltoexistential.Thefirstfourissues areeitherbetweenconstituents(Transparency,HeaderBidding) orareuniversalproblemsthatwilleventuallygetsolvedviatechnologyorconsolidation (Measurement,Latency).ThePrivacy/Tracking issueisabigonewithconsumergroups, especiallyinEurope.Itiscriticaltotreatconsumers’datafairlyandsofartheindustryhasnotexactlydeliveredonitspromiseofabetteruserexperiencefromincreasedadrelevancy.Mostly,weseeretargetedadsoftheproductwealreadypurchased!

Thenthere’sthebottomhalfofthelist.Theseissuesarecriticalifnotexistential.Let’stakeacloserlookatthese.

ToassesstheimpactofViewability,FraudandAdBlocking,considerthelifecycleofamediaimpression.Everyloadofawebpageorvideocreatesanadopportunity(denotedinblue).However,adblocking(nowestimatedat22%inNorth America)preventsadsfrombeingservedtoaperson(a“consumer”inournomenclature).Oftheadsserved,someareseenbybots(machinesthatrecordfraudulent impressions)andanother portion isdeliveredtohumansbutnotseen.

Whetheranadis“viewable”ornotdependsontheviewability standards thatvarybyplatform.Forexample,invideo,YouTubecounts30secondsasaviewwhereasFacebookis3secondsandSnapchat onesecond.

Oftheadsactuallyviewed,asmallportionoftheseinstigatesengagementbyconsumersandanevensmallerportionresults inaconversion.Theselasttwoelementsareprimarilyrelevantfordirectresponseadvertisingwhereasbrandadvertising’sobjectiveistohelpbuilddemandgenerationorpreferenceovertimeandmaybenefitfromanimpressionalone.

Ifyouanalyzedtheseissuesfromaneconomicperspective,thereissignificantvalueleakage.Marketers’“lostvalue”isthesumoffraudandnon-viewableimpressions. Inboth instancestheypaidforanadthatwasneverseenbyapotentialconsumer.Publishersontheotherhandlosevaluefrombothfraudandadblocking.

Whilewedon’tpurporttohavesolutionstoalloftheseissues,wewouldsuggestthatwhateversolutionsappliedbedonesowithconsiderationoftheprincipalsofthemarketingequation:themarketerandtheconsumer.Onadblockinginparticular,webelievethatthebestwaytopreventfurtherproliferationofsuchsoftwaredownloadsistocreateabetterconsumerexperience.Whilewesympathizewiththepublishers’predicamentandvaluetheeconomicconstructthatsupportsjournalism,forcingtheconsumers’handwithdraconianmeasuresisnotthewaytogo.Consumerchoiceisheretostay!

Thetrendtowards performancemetricsinadvertisingservestomitigatesomeoftheseissues.Whenmarketersarepayingforbusinessoutcomesandnotproxieslikeimpressions,italleviatesmanyillsfrommeasurementtofraud. Ifthemarketer isnotpayingbasedonimpressions,it’sirrelevantthat impressionsarenotseen.Thisisanaturalandhealthytrendforbothmarketersandconsumers.It’snowonderthecompaniesthatdeploythesemodelshaveseenhigherratesofgrowth.

TheWalledGardenissuerelatestothegrowing digitalduopolyenjoyedbyGoogleandFacebook.

Similartothewalledgardensofcontentfromthe90’s,FacebookandGooglehaveputupwalledgardensofdata.Thewalledgardensarenosurprise,givenFacebookandGoogle’stremendousfirstpartydataassetsandreach,whichenablethemtomoreeffectivelytargetconsumersanddeliverhigherROItoadvertisers…

...andtheyareextendingthisadvantageacrossthirdpartyappsandsitestofurthertheirdominancewiththeadditionalbenefitofnotdegradingtheirO&Opropertieswithmoreads.

Thisbegsthequestion,willothercompanieswithsignificantfirstparty datajoinFacebookandGoogleasthethirdwalledgarden?WithasizablesubscriberbaseandtherecentacquisitionsofAOLandMillennialMedia,Verizonseemstobethemostlikelycandidate.

Todate,thisstrategyhasbeenextremelyeffectiveforFacebookandGoogle,eachofwhichhasgarneredmassivescaleindigitaladvertising.Arecentanalyststudysuggeststhattheircombinedshareofallincrementaladspendhasexceeded85%,afrighteningfigureforthethousands ofcompaniesvyingfortheremainder.Wewouldcallthisissueexistential!

Finallythere’stheparamountissueoffragmentation,aconditionthatisunsustainableforboththeprincipalsandintermediaries.MarketersandpublishersstrugglewiththecomplexitycausedbythemyriadofpointsolutionsontheLUMAscapes.Fortheintermediaries,it’saconstantchallengetodifferentiateandgrowwithsomuchcompetition,whichhasledtoapullbackinventurefunding.Tovaryintoanotheranalogy,Winterishere!Theobvioussolutionisindustryconsolidation,andLUMAisdoingallitcantohelpoutinthisregard!

Letmetakethisopportunity tohighlightLUMA’ssingularfocusontheintersectionofMedia,MarketingandTechnology;thesectorsofDigitalContent,AdTechandMarTechallseenthrough thelensofmobile.

AdTechandMarTechstockshavestruggled,down13%and16%respectivelyonaveragesincethistimelastyear.

Tradingmultipleshavefallenfarmorethanstockprices,despiteindustry-widerevenuegrowthofapproximately25%.

Wherehasthevalueintheecosystemgone?FacebookandGoogleareup56%and34%respectivelyoverthelasttwelvemonthsreflectingacombined$250billionincreasetotheirmarketcap.

Toputthisnumberinperspective,thecombinedsingleyearincreaseofFacebookandGoogleistheequivalenttothemarketcapofP&G,thelargestadvertiser intheworld,aswellasWPP,thelargestagencyholdingcompanyintheworld…

…withenoughleftovertopaya$5billionfeetoLUMA;)

WehaveyettoseeadigitalIPOthisyear.

Backin2014,wereviewedarobust IPOpipelineinbothAdTechandMarTech.

Thatpipelinehasfrozen,asleadingcompaniespushoffIPOplans,raiselargeprivateroundsorfocusonM&A.

Venturecapitalinvestmenthadseensteadyincreasesfrom2013,peakingthethirdquarterof2015.

VCfundingfell29%duringQ32015toQ42015andhascontinuedtofallinto2016.

Evenmoreshocking,themedianvalueofU.S.startups hasplungedfromapeakof$61.5millioninQ32015to$18.5millioninQ12016.

Despitethenegativeoverallenvironment,asignificantnumberofdifferentiateddigitalcompanieshavesuccessfullyraisedsizablenewprivatefinancingthisyear.

Whileboththepublicandprivatemarketsstruggle,M&Ahasbeentheonebrightspotfordigitalmedia.Onanannualizedbasis,2016continuesthetrendofupandtotherightacrossmostsubsectors.

WehaveseenM&Aactivityfromallsectors,Media,Marketing,Technology,andNetwork/Commerce.

Perhapsthemostencouragingtrendweseeisbuyersacrossan increasinglybroadsetofindustryverticalshavefocusedonAdTechandMarTechtargets.Thesebuyersbringdifferentiatedcustomeranddataassetsdrivingstrategicvalueandaddingdynamiccompetitivetensionfordifferentiatedtechanddatadrivencompanies.

Beyondtheusualsuspects,wearecontinuingtoseedeeperinterestfromnewentrants, includingCRM,ConsumerInternet,Commerce,Telco,Media,Marketing,TechServicesandData.

Asanexample,Telcos havecomeintothespaceinameaningfulwayoverthepasttwelvemonths.Withlargesubscriberbasesandvaluablefirst-partydata,Telcos havelookedtoimprovetheircompetitivenessinthedigitalworldwhiledrivingmeaningfulrevenue.

RecentM&AvalidatesthisTelcointerest,withSingtel,Telenor,AT&T,Verizon,ComcastandTelstraallmakingsignificantacquisitions.Weseethistrendcontinuingasothermajorplayersactivelyevaluatethespace.

Overpastfewyears,theprogrammaticmarkethasexploded,withtheinitialinflectionpointcomingin2014.Growth hasincreaseddramatically,promptingeMarketer tocontinuallyincreaseestimatesinordertocatchupwithactualresults.Withestimatesover$20billionfor2016– programmatic isnowamarketwiththescaletoattract theinterestofthelargesoftware companies.

Whilesomearebuildingin-house,programmaticcapabilitiesarelargelybeingacquiredthroughM&A,withasignificantincreaseintransactions overthelastyear.

Investorsvaluecompaniesbasedongrowth,operating leverageandpredictabilityofrevenues.SaaS software companiesingeneralhavetheseattributes.Contrast thatwithtraditionalmediamodels,whichareshowingslowergrowth, lowgrossmarginsandI/O-basedcontracts. Thesedifferencesarereflectedbyawidedisparity invaluationmultiples.

Programmaticbusinessesarealsoshowinghighgrowth andsoftwaregrossmargins.Whilethesebusinessesmaynothavecontractualrecurringrevenues,theyhavede-factopredictablerevenuessincetheyhaveevergreenbudgets.

Astheconnectionbetweenspendandresultstightens,advertisingbecomesmorepredictable.Predictabilityisnotsomethingtypicallyassociatedwithadvertisinggiventhatadstraditionallyhavebeenboughtonaninsertionorder(“I/O”)basis.Butprogrammaticenablesperformanceadvertisingtobean“alwayson”expense,thereforereclassifyingitfromadiscretionaryoperatingexpensetoacostofgoodssold.

Toappreciatehowmuchprogress hasbeenmadeinthemobileadvertisingmarket,wethinkit’shelpfultotakeastepbackandrevisittheexperienceofafewyearsago.Earlyattemptsinthespaceinvolvedportingbanneradsthatwerecommonplaceindesktop.Usershatedtheseadssincetheyweredisruptivetotheappexperienceandusuallynotevenrelevant/targeted.Ultimately,theydroveapooruserexperienceandheldthemarketback,whichwaswhywekeptwaitingfortheyearofmobileads.

Fortunately,we’veseenanevolutiontobetterformatsassmartcompanieshavefocusedonimprovingthemobileadexperience.Chartboost wasoneoftheseinnovatorswhentheyintroducedinterstitialsthathadanativelookandfeel- notethewrapper aroundtheadcreativethatmatchesthepublisher’sart. CompanieslikeCeltra,FacebookandSnapchathavefocusedonhowconsumersusetheirphonesforspecificusecasesandhavedevelopedbestpracticesforpresentingvideoads infeeds.

Rewardedvideohasbeenparticularlycompelling– mostappsthatutilizethefreemiummodelseeverylowpercentagesofusersconverttopayers.Theyhaveagreatopportunity tomonetizethe95%+thatdon’tspendonin-apppurchases,asusersactuallylikethevalueexchangeofearningtheirdesiredcontentwithouthavingtopayforit.Thisapproach canscaleforhardcoregamersthatarewillingtoengagewithbrands atadeeperlevelformoresignificantrewards.

We’vestartedtoseenon-gamepublishersturntorewardedvideotorealizethesebenefitsaswell,suchasPandorawiththeirSponsored Listeningprogram. Userscanwatchashort videoadandgetanhourofuninterruptedlistening.Pandoracanenforceviewability andonlychargesthesponsorwhenusershaveengagedwiththevideoforatleast15seconds.Theearlyresultshavebeenpromising,asbetapartnerssaw>10%increaseinbrandawarenessanda30%liftinpurchase intent.

Upuntilnow,gamingcompanieshave(1)dominatedtheappecosystemfrombotharevenueandtimespentperspectiveand(2)beensomeofthemostsophisticatedmarketers inmobile.Appconsumptionpatternshavenowchanged,withmessaging&socialsurpassing gamingformosttimespentinmobileappsaccordingtoFlurry’smostrecentreportonusagetrends.

Mobilemessaginghasbecomethehottesttopicinthespacewithtonsofpresscoverageonchatbots,AIandtheconversationalcommerceopportunity. Thereareanumberofplayersinthesectorwithscaleduserbases,withmanyfocusedonspecificgeographies/demographicsatleastinitially.

Advertisersareexperimentingwithmessagingplatformstoconnectwithconsumers innew,engagingways. ThiscanbeassimpleasSwyft MediaofferingaMinions-themedkeyboard, apowerfulbrandingopportunity. Inmoji ismakingemojis interactive,souserscansharebrandexperienceswithaclickableStarbucksemojithat leadstoanofferorgift. SnapchatLensesliketheGatoradesponsored LensduringtheSuperBowlsaw160millionviewsthatday,withaverageengagementtimenorthof30seconds.

We’vetalkedaboutyourphonebeingtheremotecontrolforyour lifewiththeabilitytopushabuttonandaccessarangeofservices. Messagingappsareseizingupontheopportunity tointegrateanumberoftheseservicesintotheirexperienceandbecomemoreplatform-like.

Tencent’sWeChathasevolvedfromabasiccommunicationsappintoaculturalphenomenonchangingpeople’sdailybehavior. WeChat’smassive,mobile-onlyuserbaseisusingtheplatformanditsintegratedpaymentcapabilityforarangeofusecasesbeyondsocialnetworkingandmessaging,frombookingacartodonatingtocharity.

Givenyoungergenerationsprefermessagingappstoemail,theseplatformsrepresentanaturalchannelforcustomerservice.TheexampleshownhereisfromFacebook’sF8showcaseofhowthey’reworking tobringbrands intoMessenger.Kik isinnovating inthisarea,focusingonbuildingbrandrelationshipshigherupthefunnel.Itwillbeinterestingtoseeifconsumersarewillingto interactwithbrands inthesamewayastheydowiththeirfriends.

Conversationalcommerceclearlyhastremendouspotential,butbrandsneedtostriketherightbalancewithconsumerstopullthisoffsuccessfully.Messagingappsarepersonalspaces,so itiscriticaltogettheexperienceright/establishanauthenticrelationship. Brandscan’tbetootalkativeoruserswillturnthemoff.Itisparamounttodelivertherightmessageattherighttimeandthemobilemarketingautomation/CRMinnovatorswillbevaluabletodeliveringtheappropriate userexperience.

It’sobviouslyearlydaysforthebotmarket,butifmessagingplatformscanintegratethesetypesofservicesinagreatexperience,theyhavethepotentialtorealizesimilarsuccesstowhatwe’veseenintheappecosystemandchangeanumberofbrands’thinkingwithrespecttotheirmobileappstrategies.

Weareseeingappfatigue,asmostpeopleonlyuseafewappsregularlyandAmericansarenowdownloadinganaverageofzeronewappspermonth,somessagingplatformsrepresentanexistentialthreattoapps. Somebrandswillhavebigenoughaudiencesandhighenoughengagementthatastandaloneappmakessense,butmanyothersmayturntomessagingplatformsastheirgo-tomobilesolution.

Theoldmediabusinessmodelwasdisjointedandsiloed.Separateteamswereinvolvedwitheachprocesswithnowayforeachsteptolearnfromeachother.Thenewmodelusestechnologyanddatatoconnectproduction, distributionandmonetizationtocreateafeedbackloopthatoptimizestheoverallbusiness.

Publishingnolonger isbasedongutfeelingoremotion.Insteadofpublishingcontentblindly,publishershaveinsightintohowitwillperformbeforeitgoeslivewithobjectivedata.

Howdopublishersdoit?Publishersconstantlygatherdataandanalyzesignalstooptimizecontentfortrendingstories,timinganduniqueheadlines.Thisabilityhasbecometablestakesforanyscaledpublisherwiththenumberofdistributionchannelsanddevicescontinuingtogrow.

Aspublishershavemasteredtheabilitytoreachlargeaudiencesatscale,marketershaveturnedtothemtocreatebrandedcontentandnativeadvertising.Tofulfillthisdemand,alargemajorityofthetoppublishershaveformeddedicatedstudiostocreatecontentfortheseclients.

Publishershaveeffectivelybecomethenewagency,bybringingcapabilitiestomarketersthatthetraditionalagencylacks:distribution.Publishersarenolongersimplyadestinationtosellmediainventory.Theycannowplayaleadingroleintheplanning,creationanddistributionofmarketingcampaigns.Thistrendisindicativeoftheevolvingskillsetandambitionsofthemodernpublisher.

Amongthechallengespublishersfaceduringthe“distributed”ageofmedia,thegreatest isplatformrisk.Publishersarebeingforcedtoadaptquicklyor losesignificanttrafficwitheveryalgorithmicchangefromtheleadingdistributionplatforms.

Astraffictopublishers’homepagesplummets,theirdependencyonreferraltrafficgrows.Searchandincreasinglysocialhavebecometheprimaryreferralchannelsfromwheremostvisitorscomefrom.Therefore,itisnosurprisethatFacebookandGoogleleadreferraltrafficbyanoverwhelmingmarginforwebtrafficasawhole.Althoughthismaylookdifferentforpremiumpublishers.

Themedialandscapecontinuestochangerapidly,withnewtrendsandchallengesemergingeveryyear.Asthelandscapeshifts,itbecomesessentialtoacquireotherpublisherswitheitherniche,yethighlyengagedaudiencesorwithtremendousscaleanddistributionproficiency.

Duringtheearlydaysofdigitalvideo,YouTubeledthewayandquicklybecamethede-factowebdestinationforvideo.YouTubehassustaineditssuccessbybuildinganecosystemofcreatorsandadvertisersthatpushesgreatcontentandviewersbacktotheplatform.

Butnowtheindustry hashitaninflectionpoint.DozensofcompetitorshaveemergedasmobileandOTTvideohaveexplodedinrecentyears.Eachhasitsownuniquevaluetoconsumers,showinghowvideocontinuestoevolvebeyonddesktopvideoandhowtechnologyiscreatingdifferentviewingandcapturebehaviors.

WhenFacebookintroducedauto-playvideosintheNewsFeed,itwasawatershedmomentformobilevideo.Consumption forthisformattookoffandquicklyshowedthepotentialforvideointhemobilecontext.

Throughapps likePeriscopeandFacebookLive,usersarebroadcastingtheirlivesandsharingcontentwherevertheyare.“Live”videoisnolongerreservedtoTV.Infact,audienceswatchinglivevideothroughmobilenowmatch,ifnotsurpass, audienceswatchingTV.

Snapchathascreatedtruemobile-firstvideoadvertisingbynotonlyreformattingadsvertically,butbyalsointroducinginteractiveexperiencesnativetomobile,suchasswipingandshareability.

Digitalvideoisenjoyingasurgeinmarketingspendasmarketersallocatemoremoneyintopremiumcontent,whichisvery limitedinsupplybuthighindemand.Digitalvideoisalsoincreasinglybeingboughtandsoldprogrammatically.Theprogrammaticvideomarket isexpectedtogrowatacompoundedannualgrowthrateof172%from2013-2016.

Althoughthedigitalvideomarket isgrowingatastaggeringrate,itpalesincomparisontotheTVmarket,whichisexpectedtosurpass $70billionthisyear.Theworld’smajormarketersreservemostoftheiradvertisingbudgetstoTV,whichisthelargestandmostpreferredchannelforbrandadvertising.

However,theoutlookfortheTVmarketseemschallenging.Upfronts,whichareoftenusedtogaugethehealthofthemarket,haveshownweakinterestfromTV’smajoradvertisersoverthepastfewyears.WhiletheUpfronts areexpectedtoincreasemarginallyin2016,TVcompaniesarestillontheirheelsasconsumerscontinuewatchingcontentonmultiplescreensandmarketersadjusttheiradvertisingspendaccordingly.

InadditiontotheUpfronts decline,in2015,wesawthesellingpointsofTVanddigitalplayersreverse.TVnetworkswereintroducingnewdataproductsafterfeelingpressurefrommarketerstoprovidemoregranular targeting,whileDigitalcompaniesweresellingmarketershighqualitycontentthattheyfeltdeservedpremiumdollarsbecauseoftheircovetedaudiencesandengagingcontent.We’veseenthistrendcontinueinto2016asthetwosidescontinuetoconvergetheirofferings.

Forthedigitalplayers,thishasbeenasuccessfulstrategy,astheadspendfororiginaldigitalvideohascontinuedtoincreasewithadvertisersbeginningtoviewitaspremiumcontent.Since2014,theaverageannualadspendonoriginaldigitalvideohasincreased114%,from$2.1billionin2014to$4.5billionin2016.

Whilewewouldhesitatetosaythat“ProgrammaticTV”isactuallyhere,companiesarecertainlymakingstepsintherightdirection.NBCUniversal,forexample,announcedNBCUx forLinearTVinFebruary, allowingadvertiserstousedataandautomationtobuildmediaplansforlinearTVinventory.Similarly,AT&TrecentlypartneredwithVideology tocreateaprivatemarketplaceforadvertiserstobuylinearTVinventoryprogrammatically.

Whatisclear,isthatmonetizationof“ProgrammaticTV”won’tfollowprogrammaticmonetizationondigital.Wheredigitalprogrammatichasfocusedprimarilyonreal-timebidding(“RTB”)andopenauctions,TVwillbemorecautiouswithitsinventoryinordertoprotectitspremiumdistinctionandkeeppricesup.Instead,ProgrammaticTVwillfocusmoreontargetingandworkflowautomation.

Whenyouconsiderthesizeoftheopportunities, itbecomesclearthattherealwinnerswillbethosecompaniesthatarefocusedonsolvingproblemsforthe100%opportunity. Programmaticvideoisafastgrowingmarket,butthemostlucrativeopportunity istheentireTVandvideomarket.

WhilethebuyingcapabilitiescontinuetoexpandforbothTVandDigitalVideo,marketersarestillblindtowhattheoptimalmixis.Thisprovidesamassiveopportunity forcompaniesfocusedonthe100%opportunity, whichareattheforefrontofassistingmarketers insolvingthis issue.

AsTVanddigitalvideoconvergencetakesplace,we’veidentifiedthreemajorgamechangersthatcouldhaveamaterialimpactontheecosystem.First,andrarelymentioned,isgovernmentregulation.Forsomeconstituents,impendingchangesfromtheFCCposeasignificantthreattotheirbusinesses.Forothers,theypresenthugeopportunities. Second,wenotethatabreakthrough technologycouldmateriallychangethings,forexample,AppleTV.Finally,alternativedistributioncouldexclusivelylicensemustseecontent.

TheFCChasproposedrulechangestoallowconsumerstouseanykindofset-topboxregardlessoftheircableproviders.Thisinitiativestemsfromtheissueofrisingset-topboxprices,whichtheConsumerFederationofAmericabelievesiscausingconsumerstooverpay$6-$14billionannually.However,theFCC’sproposedchangeshavemajorimplicationsbeyondthebox.

Sweepingchangestotheindustrywillenabletechnologyleaders,suchasAppleandGoogletodisruptthetraditionalTVmodel.Underoneinterface,theTVexperienceofthefuturewillbringcable,video-on-demand(VOD),OTTandappstogether.Content,distributionandmonetizationwillbeupendedastheywillnolongerbeconfinedtorestrictionsandlimitationsoflegacybusinessarrangementsamongthebroadcastandcablenetworks.

Theindustry istakingnoticeasevidencedbyRovi’s recentacquisitionofTivo anditwon’tstopthere.Weexpectstrategics tomakemajormovesbeforethedustsettles.

TheconvergenceofTVanddigitalvideoisbeingwatchedcloselybythelargeststrategics fromtelecomtomedia.Thesemajorplayersareaimingtocapitalizeontheopportunity tomonetizetheirlargecustomer/userbasesinthelargestadvertisingmarket.

Thereareseveralmajortrends inDigitalMarketingthataredrivingtheecosystem,suchasMassPersonalization,ContentMarketing,MobileMarketingandB2BMarketing.WhileweareonlyfocusingontheAdTech/MarTech convergenceinthispresentation,wewentthrough theothertrends indepthinourStateofDigitalMarketing,whichcanbefoundonSlideshare here[link].

Beforewestart,wewanttolevelsetforamoment,asoftentimestheactualmarketer’sgoalgetslostinallthenoisewhilediscussingmarketingtrends,companiesandtechnologies.Butthegoalisclear:drivemorerevenues…atthelowestcost.

Akeyfocusareaformarketerstryingtoachievethisgoalistooptimizethecustomerexperiencethroughdeliveringtherightmessage,attherighttime,totherightperson.Fromthe“marketingclouds”downtosmallstart-ups,technologyvendorsarefocusedonprovidingsolutionstoenablethis(orat leastanelementofthis)fortheirclients.

What’s interestingtonote,isthatwhilebothB2CandB2Bmarketersareseekingtooptimizethecustomerexperiencethroughpersonalization,theyaredoingitthroughdifferenttools.B2CmarketersareworkingattheconvergenceofAdTechandMarTech toreachconsumersonapersonalizedlevelthroughearned,ownedandpaidmedia.Meanwhile,B2BmarketersareworkingattheconvergenceofMarTech andSalesTechtoidentifyandpersonalizemessagestothehighestqualityleads.

AtLUMA,westartedusingthechartontheleftyearsagotodiscusstheroleofthedatamanagementplatform(DMP),whichwastomanagecookies(andnowmobileIDsandother identifiers)tounitetheupperportionsofthefunnel.Inthepastcoupleyears,“predictivemarketingplatforms”haveemergedfor1:1marketing(particularlyforretail),withDMPsbeingusedmoreforsegment-basedmarketing.

WhileDMPs,CRMsandPredictiveMarketingplatformsaretheindividualtoolsbeingusedbyMarketers,therealgoalofthesetoolsisforMarketerstoidentifyandunderstandtheiraudience.

Thereason, isthataudienceisthedriverbehindmasspersonalizationandthe360degreemarketingcycle.Bytrulyidentifyingandfollowingyouraudiencethroughthemarketingcycle,marketersareabletoeffectivelyplan,messageandmeasureconsumersonapersonalizedlevel,atmass.

Audienceisthekeybecauseitbringstogetherbothaconsumersuserprofileandidentifiesthemacrosschannels.Bytrulyunderstanding audience,Marketerscannotonlydeterminewhoyouareandwhatyou’re interestedin,butalsoidentifyyouindifferentsettingsandacrosschannels.

Asaresult,Identityiscriticaltoprovidingaconsistentcustomerexperience.Facebookhaslongfocusedon,andhadsignificantsuccesswith, its“people-basedmarketing”solutions.Other largesoftwarevendorshaverespondedwithacquisitions(suchasLiveRamp andDatalogix),ororganicdevelopment/partner programs.

TheunifyingelementbetweenAdTechandMarTechisdata-drivenmarketing.WhiletherehavebeenmanyacquisitionsinAdTechandMarTechindependently,akeystrategicareaistheconvergenceofthesemarkets(thelightgreyarea). IdentityhasbeenthemainthemeforstrategicM&Asofar in2016,withTelenoracquiringTapadandOracleacquiringAddThisandCrosswise.WeexpectthisactivitytocontinueasAdTechandMarTech convergearound data.

LUMAhasrecentlylaunchedtheLUMAInstitute,thedivisionthat incorporatesourresearch,contentandeventsinitiatives.ThemissionoftheLUMAInstituteistoprovideeducation,insightsandsupport toallconstituentsofthedigitalecosystem.Wepartnerwithmedia,marketingandtechnologycompaniestoprovideadviceandeducationatleadershipoff-sitesandcustomereventsonacustomizedbasis.IfLUMAcanhelpyourorganizationsortthrough thiscomplicatedanddynamicsector,contactGayleMeyersatgayle@lumapartners.com.