Ad Tech Consolidation: What Comes after the LUMAscape?
By now, you’ve probably seen the LUMAscapes. They’re the complex, sprawling mappings of the ad tech industry’s many entities as they stand today – fragmented and wholly redundant.
The mobile LUMAscape is particularly messy.
When the first iPhone hit back in 2007, advertisers weren’t prepared for the mass consumer exodus to mobile that took place. Their desktop-first technologies didn’t work. Ads were breaking. Mobile – for a while – remained a mystery.
But soon, innovation played its hand. Emerging companies began to develop new technologies to combat the myriad of problems the mobile ecosystem faced.
It was a piecemeal solution.
And while that piecemeal solution did address each problem and pain point individually, on the whole, it created another set of issues, plagued by fragmentation, breakages, inefficiencies, and increased costs.
Observe the infamous mobile LUMAscape. There’s currently no better visualization of this piecemeal solution today – a solution still fraught with failure.
Can it last?
The easy answer is no.
Terry Kawaja, the influential architect of the LUMAscapes, has forecasted the eventual downfall of the ecosystem as we know it. Others have recently chimed in. “Consolidation is coming!” the industry now cries.
And how’s the journey to consolidation to take place? In the words of Terry Kawaja himself, “There will be blood.”
It’s a narrative not unfamiliar in American history.
In 1900, there were close to 500 car companies in America. By 1908 there were 253. At the beginning of the Great Depression in 1929 there were 44 – and 80% of the output came from three industry behemoths: Ford, GM and Chrysler.
Those automobile manufacturers who were able to seize control of their nascent and massively profitable industry, did so by consolidating the supply chain. And while the analog of the automobile manufacturers perhaps imperfectly portends the future of the ad tech industry, the moral of the story remains the same:
Those companies that can control all parts of the supply chain will rise – and those that can’t will either fall or be consumed by the majority.
We, The Mobile Majority, have started with the belief that consolidation is inevitable, that mobile is the future, and that ONLY players with an entire mobile stack can compete.
To quote a recent post by Peter Horan:
“With digital advertising there are too many options, too many people touching the deal, too many people arguing about the bills, too many people saying that everyone else is a crook.”
In short, there’s just too much. The supply chain is broken.
In order to execute a campaign well, a media buyer not only needs to work with 5-15 different vendors, but all those vendors need to be integrated. If one of them is not up-to-date, or any of the hundreds of thousands of connections don’t work, the campaign doesn’t work.
It’s for these reasons that we at The Mobile Majority have built a complete and vertically integrated mobile buying stack – not through partnerships but with our own tech developed in-house.
The result of doing so already speaks for itself.
In a recent campaign, our DSP technology went head-to-head with an established, desktop-first platform. We performed 16X better in terms of the final KPI (email address submissions) the brand wanted. Of particular note, this KPI was not easily faked through bots and non-human traffic.
This was only possible due to the fact that we’ve engineered the entire ad stack to deliver significantly higher campaign performance (2X to 20X) while reducing redundant vendor costs by over 60%. Instead of deciding to focus on local optimizations, we focus our tech on optimizing for the final outputs. Somehow the ad tech world got so caught up with little companies building platform features that everyone seems to have forgotten what the customer (the advertiser) wants: results.
So Terry Kawaja may indeed be right. Most ad tech companies will fail long before they can make a case for being listed on his LUMAscape chart.
But those companies that succeed?
They won’t do so vying for placement on a LUMAscape. Their vision has to be much bigger, much grander – just as the visions of Henry Ford, Rockefeller, and Carnegie’s were years ago.
In order to succeed, ad tech companies will have to build the components to make up the entire chart. That’s the only way to improve campaign outcomes while reducing costs.
The Mobile Majority doesn’t fit the LUMAscape model. Instead, we’ve just displaced it.