Here are the three reasons most of the companies within Terence Kawaja's display advertising landscape map will fail, and the three types of companies that will win big.

Much has been written about the notorious “logo vomit” map of famed internet banker Terence Kawaja. I reference his handy charts on my blog, and often his “Display LUMAscape” as a reference point for thinking about the digital display business, and what will happen to it.

Many have tried to navigate through the various categories and dissect what may be “happening” in the space, which is a favorite pastime of company executives trying to raise money for many of the identified advertising technology outfits referenced within.

Nobody ever really tries to explain the whole thing, though. It’s just too complicated, I guess. Allow me to try:

A few years ago, people started to figure out that you could use technology to target advertising to people on the web. Ever since then, 250 companies have placed themselves in the middle of the transaction between the advertiser and the inventory, confusing everyone.

Now, most of them are running out of money and will sell cheap, get acquired, or go out of business.

Perhaps that oversimplifies things slightly, but the reality is that there are many companies in the space that are primed for one of those three scenarios. Unfortunately, most of them will sell for less than their investment, or go out of business.

Here are the three big reasons we have gotten here:

It was a bad idea

The whole point of most of the companies on the Kawaja map is to help advertisers use data to find exactly the right audience at the right time, serve them the right ad, and maybe find something out about them that helps drive branding or sales.

In the past, most advertisers used to do that contextually (putting ads for shoes in Vogue, for example) and it seemed to work pretty well. When that internet thing came along, publishers could get something nearing their print CPMs for “site sponsorships” and premium banner advertising alongside good content.

Sooner or later, however, publishers decided to put banners ads on all of their pages, creating the advertising largest inventory glut known to man. That created a big problem.

All of that banner space needed to be monetized somehow, and publishers were quickly discovering that it was hard to make money on the trillions of monthly advertising impressions they had created.

But nobody wanted to buy $10 CPM banner ads on message board pages, and the “contact us” page. So, in order to “solve” this problem, exchanges popped up and allowed publishers to “monetize” this space by having various parties bid on the inventory.

Things got even better when data companies came in, and were able to layer some demographic data atop those impressions, making audience buying possible for the first time. The venture money flowed, as smart young technologists created fast-moving software companies to help marketers exploit this trend as they sought a way to help reduce industry average CPMs from $20 to $2.

Mission accomplished! In the last ten years, average CPMs have been drastically reduced, 100% of a publishers inventory is being “monetized” (often by ten or more companies), and you can target an ad down to one’s shoe size. 

 So, what’s the problem? Hasn’t turning advertising from an art into a science worked?

The answer is: Yes, but not for all of the companies on that map. People visit three sites a day, and one of them is Facebook. If you want audience targeting, why not just find exactly what you want from a social network?

They are the ones with the real audience data. They are also the ones with the audience scale, having about five times as many “profiles” as the next largest data company.

The problem with all the companies trying to sell you audience targeting and ad technology is that it only works when you have audience scale (they don’t) and deep audience data (they don’t have that either).

Facebook, Google, and LinkedIn (and the next company that people are willing to share their private information with) are going to win the audience targeting game. When you are talking about audience buying at scale, social media IS digital media.

It’s still about art

If you believe that the average web user visits only two sites a day besides Facebook, then you better find them on those sites—and give them a really amazing experience with your banner ad.

That thing should play video, games, talk to you, and almost pay you to look at it. Since only three out of every 10,000 people will click on it, you had better make sure the creative really tells a terrific story and gets your brand message across too. 

That means standard sized banners that work with exchange-based buying are pretty much irrelevant, since they have a hard time doing any of the above. It also means that context has to accompany placement.

It is not enough to reach a “35 year old woman in-market for shoes.” You have to reach her when she is on her favorite fashion site, or otherwise psychologically engaged in shoe consideration. The ad should be in a brand-safe environment that engenders trust—and compliments the creative in question. That sounds suspiciously like premium display advertising…the stuff that was being sold ten years ago!

In a certain sense, we have almost come back full-circle to guaranteed, premium advertising. And that means an emphasis on the creative itself. If you look at the map, it’s clear that creative isn’t a part of the picture…but it might be the most important thing driving the future of the digital display advertising business.

It’s confusing

Even if agencies and advertisers wanted to take advantage of a few of the of companies cluttering the “landscape,” they would need to log into and learn multiple systems.

As a marketer looking to reach women, am I really going to log into Blue Kai and bid on demographic “stamps” from Nielsen, log into AppNexus and apply those to a real-time exchange buy, constantly log into my DART account to check ad pacing and performance, periodically log into my Aperture account to download audience data, and then log into my Advantage account every month to bill my clients?

Maybe—but that’s exactly the reason why digital media agencies are making 3% margins lately. Most of these technologies are really great on their own, but string together too many of them and you start to get lost in the data, and are unable to react to it.

For digital marketing to be effective, a set of standards need to be created that enables systems to work together and share information. Basic B-school dogma teaches you that effectiveness starts to break down when a manager has more than five direct reports.

If you believe that, then it’s not hard to imagine the effectiveness of a 22-year old media planner managing five logins on behalf of his agency. It’s not just confusing, it's impossible.

We have built an industry ripe for aggregation, and the Googles, Adobes, and IBMs of the world will not disappoint us!

So, what companies will succeed in this ecosystem?

Social scale

 If you agree that all reach advertising targeting audiences will eventually be on social networks, then you should look to work with companies that are making social advertising scale effectively.

Doing Facebook advertising is incredibly easy, but doing it right is hard. Doing it properly requires extreme multivariate creative optimization and, more importantly, knowing what to do with the mounds of truly actionable audience data that Facebook and other social networks will hand you.

Companies like that are doing this are EPIC WIN.

Creative enablers

 Since the conversation is coming back to the creative, how can technology help make great creative even better and help advertisers understand how that creative is being engaged with?  

 The click is a dead metric to most seasoned advertisers, who are spending more time with branding measurement tools (Vizu) and creative ad analytics startups (Moat) that are well positioned to “science-ify” the truly important part of advertising: the creative itself.

Companies doing that well are also going to be EPIC WIN.

Standard bearers

With all of the logins out there, it is inevitable that one company is going to try and create the technology stack for next generation media buying that puts all the pieces together seamlessly.

There are a number of companies trying to do this right now (full disclosure: I work for one of them), and I believe there will be a lot of advertisers and agencies relieved to log into a single platform, and be able to access all of their vendor relationships in one dashboard.  

This will take some time, but the companies that enable standardization across technology providers will also WIN big.

Chris O'Hara

Published 20 July, 2011 by Chris O'Hara

Chris O'Hara leads global marketing at data management platform Krux, a Salesforce company, and is a contributor to Econsultancy.

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Comments (7)

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Mike Teasdale

Mike Teasdale, Planning Director at Harvest Digital

If you add value, you'll succeed. If you don't, you'll fail.

Fast forward a few years and I expect the slide of this particular landscape will feature just as many logos, but not necessarily the same ones. And we shouldn't wish away the diversity or energy of this sector.

In terms of who will end up putting the bits of technology together first, I can spot the Google logo popping up a few times in different bits of the ecosystem...

about 7 years ago


Steve Davies

Chris, I really like your thinking and was in agreement with everything you said right up until you posed the solutions for what a company needed to do to succeed.

Let me throw a few thoughts on the table. I come from the perspective of having been a big dude in the analytics and customer data world, but also running several wholly digital publications and dealing with the realities of maximising the value of our brands. In my data agency life we worked closely with Yahoo, Microsoft and Google developing complex behavioural targeting algorithms and deploying insight-led marketing to maximise the value of our clients inventory.

As a publisher I took an opposing view, rather than try to intellectualise how to sneak an advert into the eye line of our readers and then incentivise them to click, we've come at the issue by realigning our onsite marketing campaigns to actually benefit the reader - providing real benefit to them rather than trying to outsmart them.

Premium engagement is indeed where its at for marketers on any site with less than Facebook scale, but display advertising (whether it be optimised or not) is the wrong answer, and a highly inefficient approach. Inventory must be reduced, adding value to the site visitor must be drastically increased and yield should be the measure of success in all but a few exceptions.

You also place emphasis on the creative - and whilst I understand what you mean (i.e. upping the call to engagement), it's not creative that achieves this but instead the experience delivered by the creative. We've run many campaigns with great creatives but the destination (or result) of a user engaging with the creative is disappointing - either because it goes to a standardised site or microsite, or the game/competition is far less engineered for enjoyment than the creative which was used to attract interest.

We need a 'new' definition for creative and if that means using a new terminology then so be it. Creative is by its very nature NOT results driven and therefore will continue being a waste of money without the overriding design and fulfilment of a well thought campaign strategy.

My advice would be to focus on the campaign experience, stop trying to coerce site visitors and start working with them, make engagement genuinely rewarding and focus on the end-to-end process leading to acquisition and conversion. But bear in mind that a successful marketing campaign is one that is a win-win for both the brand and the customer.

Great post though.

about 7 years ago


Andy Betts, Managing Consultant, Business and Digital Strategist at Bett-zi

Nice post Chris - I really like the detail and totally agree on the 'acqusition' - what a like to call 'quick fix acqusitions' and the danger of data spin/mix up. Data hype!

Some companies are making great inroads into integrating multiple technologies, some are just plain 'smoke and mirror' type technologies. The key to growth for specialist technologies is ensuring they work with attribution technologies. They key to success for holistic technology providers is in actually proving it works, case studies, data studies etc - for many, this is a few years away

about 7 years ago


Roger Williams

One thing often pointed to is how unsustainable the current ecosystem is and that there must be consolidation. This is something that is beginning to be seen in certain of the ‘categories’. If we look at ‘Creative Optimization’, for example, Teracent, Dapper and Tumri have already been acquired. Indeed, as Mike commented, the Google influence (whether under its brand or its other divisions – Invite Media, DoubleClick, adMob, Teracent etc.) is becoming more prevalent as it begin to piece together the different areas.

about 7 years ago


Keith Pieper

I disagree with the notion that the display ecosystem will fail. Since 1996 I have seen the 468x60 give way to larger sizes; no automation to partial automation; ad auctions evolve from a phone in based system to ad exchanges; banners evolve from GIF to Flash and rich media; audience targeting evolve from lack of data and poor technology to stuff that works and scales; and privacy concerns come and go. The great thing about this space is how fast it evolves. Because of that, there will always be massive amounts of innovation - fuel that with the ebbs and flows of VC infusions. Poor options will fade away and the good ones will consolidate. And because technology becomes more pervasive, there will ultimately be less waste and smarter media - hence over time we should see a favoring of an optimal balance of supply and demand. Startups will always have a slight edge over the "big three" with a portion of the industry (they simply can't be all things to all people). Agencies will become more automated and the need for integrator between these systems will be essential. Technology makes many things better but also makes them more complex. That will never change.

about 7 years ago

Chris O'Hara

Chris O'Hara, Head of Global Marketing, Krux at Salesforce

Steve: I do not disagree with a single thing you said. Indeed, I concur that the creative element almost needs to be set aside from the conversation about performance--at least until there are more standards around brand lift.

As far as Keith's comment, I should apologize for my hyperbolic headline. I don't think the ecosystem will fail--just many of the companies within it that are solely focused on audience targeting. We are already seeing networks become "platforms" and data vendors becoming "data management platforms." Some of these companies will be nimble and smart enough to adapt to the rapid seismic shifts occurring in the landscape, some won't. I'll bet there are as many logos 10 years from now, but we'll be trying to solve for a new problem.

I still think that a lot of what's happening in the space will be obviated by the sheer scale of data-rich and opted-in social networks.

about 7 years ago


Richard Sharp, UK MD media and head of trading at ValueClick

I can see where you’re coming from Chris, but there’s more to think about within the online advertising arena than whether to choose social media or display, it’s more about learning about your audience’s behaviour, developing a campaign – for which display or social media might be just one element – and integrating all elements together.

Let’s be transparent here; I work at ValueClick media, a display network wholly owned by ValueClick – a digital advertising specialist. I completely agree with what you say, the digital advertising market is evolving and innovating, but some display networks are continuing to innovate. Here at ValueClick we analyse all campaigns and display advertising is proven to influence purchase choice.

It is the multiple touch points of an advertising campaign which can convince a consumer to buy; this includes display, mobile, social media and search. It is these individual elements which contribute to the final click, and all need to be considered to build an effective campaign. The element which links these, and ensures brands continue to learn about the online space, is experienced planning which feeds into ongoing analysis.

Without this analysis across an advertising campaign or programme, how can you ever know what type of advertising is more effective than the other? Yes, the online advertising landscape is complicated, yes, it’s confusing, yes, there are lots of companies who don’t provide good ROI. It’s the background research, innovative technology, human experience and analysis which will separate the wheat from the chaff.

about 7 years ago

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