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Online advertising is a remarkably complex field. Terence Kawaja has a new way for potential investors to visualize it.

The market involves hundreds of small and large companies that help advertisers reach consumers and help website publishers, mobile-application developers, search engines and other digital destinations generate revenue through advertising.

Kawaja, who runs boutique investment firm LUMA Partners, spent months putting together six new graphics that show how 1,240 different companies fit into the following categories of online advertising: display, video, search engines, mobile, social, and commerce. (See slides below, or click here for the LUMA site.)

The graphics, Kawaja says, help “large strategic acquirers” such as Google, Yahoo and Adobe to identify possible targets of acquisition.

Kawaja, well-known in the online advertising industry, rose to greater prominence after publishing a graphic in 2009 that attempted to make sense of one particularly fragmented aspect of online advertising: the market for graphical, interactive and video ads, a category known as display, which generated $10 billion in U.S. spending last year, according to eMarketer. The graphic became an important tool used by online ad executives.

For instance, after the graphic was published Kawaja represented Invite Media in its acquisition by Google last year. (Invite allows advertisers to buy ads through digital exchanges that match websites with advertisers, known in the industry as a demand-side platform).

Kawaja’s 2011 graphic on the display-ad market includes newcomers such as TellApart, which helps advertisers do what’s called “retargeting,” or showing graphical ads to Internet users for products they previously expressed interest in. The new “social” graphic lists the companies such as Vurve and Efficient Frontier that help marketers advertise on Facebook, Twitter and other social-networking-type sites such as LinkedIn and Loopt.

The graphics, which Kawaja is branding as “LUMAscapes,” will evolve as he receives feedback about other companies that should make the cut. Some ad executives say the graphics will be a point of discussion during this week’s Digital Media Summit, a gathering of chief executives of private Internet companies as well as investors in New York.

Check below for the full list of new graphics, and click on the images for the larger version.

Mobile LUMAscape [Click the image to enlarge]

Search LUMAscape [Click the image to enlarge]

Commerce LUMAscape [Click the image to enlarge]

Video LUMAScape [Click the image to enlarge]

Display LUMAScape [Click the image to enlarge]

Social LUMAScape [Click the image to enlarge]

Detailed Facebook Demographics
Age range Male Female
14-17 9.8% 9.1%
18-20 13.7% 13.2%
21-24 17.5% 16.6%
25-29 13.2% 11.7%
30-34 10.2% 9.7%
35-44 15.3% 15.4%
45-54 10.4% 12.3%
55-63 5.5% 7.2%
64+ 4.5% 4.8%
Source: Facebook.com ad platform. Percentages include those Facebook members who include a gender in their profiles. Data collected in May 2011.

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Energie Naturelle

Here are the 10 winners of our first Ads Worth Spreading competition. With this competition, we're seeking to reverse the trend of online ads being aggressively forced on users. We want to nurture ads so good you choose to watch. On TED.com, ads run after our talks, not before. This means they can run longer than the TV-standard 30 seconds. And that's the key! In 2-3 minutes, there's enough time to really tell a story, share an idea, make an authentic human connection, become unforgettable. Instead of ambush, they offer pleasurable, intelligent engagement. We invite you to view, comment, rate -- and share!

Is the impression—the longtime currency of online advertising—on its way out?

It could be. Three major advertising/media trade organizations, IAB (Interactive Advertising Bureau), the ANA (Association of National Advertisers) and the 4A’s (American Association of Advertising Agencies), have announced a new initiative aimed at simplifying online ad measurement and metrics. The groups have hired management consulting firm Bain & Company and the strategic advisory firm MediaLink to help with the effort. And everything is on the table, including possibly ditching the impression as a currency.

The new initiative, Making Measurement Make Sense—announced at the IAB’s Annual Meeting in La Quinta, Calif.—won’t necessarily have a lot of teeth. But the three groups are hoping their efforts carry enough influence to enact serious change in the online ad industry, which continues to struggle to pull in its fair share of brand advertising, according to many prominent executives.

What the effort will entail is still unclear. During a press briefing, leaders from each of the three groups spoke in vague but grandiose terms.

According to Sherrill Mane, the IAB’s svp of industry services, the goal of the initiative is “to change everything we do when we transact digital media." Why? “To make it more brand hospitable.”

The group acknowledged that digital media is still not hospitable enough to brands. Digital buyers are faced with half a dozen sources when planning campaigns, including Nielsen, comScore, Quantcast and Compete. Different sites and ad networks sell using varied definitions of ad impressions. Video is even more muddled and disorganized.

“The supply chain is messy and ineffective,” said Mane.

Yet these industry groups won’t have a lot of authority, other than issuing guidelines or a whitepaper that they hope will guide brands, vendors and ad buyers. But Mane and her counterparts said that this issue has major momentum, particularly the support of the industry’s leaders.

  “This is about getting agencies, publishers [on board] with what is best for the industry,” said Bob Liodice, president and CEO of the ANA, who predicted the group would produce some sort of results in six to eight months. “This is a standard setting exercise.”

Added 4A's evp Mike Donahue: ”This is not about being reflective. This is about being actionable.”

As we’ve written on our blogs before, new technologies are profoundly improving display advertising. In the last few years, there’s been a technological Big Bang, creating new ways to buy display ads across the web: exchanges involving real time bidding, demand side platforms, improved ad networks and more.

These technologies are enabling marketers to seize the digital moment and run far more effective campaigns, but just as the universe changed dramatically following the Big Bang, the digital buying marketplace has changed forever, requiring some new “laws.”

The three laws of display advertising physics

1. The Theory of Relativity: What’s better, a demand side platform, or an ad network? It depends

Our clients often ask us if they should use our DSP (Invite Media), or our network (the Google Display Network), especially as the distinction between the two platforms blurs. We often answer with an analogy from the world of stock investing (it’s not perfect, but it’s a first step). The first question is whether to buy and sell yourself, or engage someone else to manage your portfolio:

• The online broker model: For buyers looking to manage the details of their ad buying and use their own technology and data, a DSP like Invite Media is often the best option. This is similar to an online broker that lets you log in and closely manage your investments (and, as with Invite Media, get access to special trading features, market intelligence and expert advice).

• The stockbroker model: Some marketers have a desired campaign result (such as a target reach for a new car campaign, or a number of conversions for a sporting tickets campaign). They want to outsource the details and have a customized, transparent media solution designed for their campaign. The Google Display Network most often fits this bill—it’s like having a stock broker manage your portfolio to meet your investment goals.
  

Both platforms enable access to huge pools of ad space, deliver the same types of ad formats and facilitate similar ways of targeting ads. Again, it’s like buying stocks—whether you choose an online broker or stockbroker, you can select from thousands of types of stocks, markets and investment products.

2. Fusion Theory: Why contextual and audience buying release more energy when combined

Some have suggested that audience buying (delivering ads based on users’ interests) and contextual advertising (targeting ads to content) is an either/or proposition. However, we believe it’s the combination of the two that is most powerful.

• With effective contextual advertising, you can get the maximum reach while delivering your message in highly relevant locations—like news articles related to your products—in the precise moment a person indicates interest. Contextual advertising is vital to building brand awareness and reaching new prospects at relevant moments.

• Audience buying—such as remarketing—enables marketers to reach people who have already shown an interest in a particular topic or brand. This is especially effective for re-engaging consumers.

Marketers combining these types of buying can reach a broad range of people, then hone their messages to particularly good prospects to maximize the impact of their campaigns. We’ve seen that this approach drives better campaign performance; third party studies back it up.

3. The Law of Perpetual Motion: Why marketers should embrace a rapidly moving industry

Display advertising is in a state of constant motion, caused by the acceleration of online media consumption and the explosion in new technologies.

• Advances in computer science are driving changes in advertising. To illustrate: creativity has always been at the heart of good display advertising. But look at what’s become widely used by marketers in just the last few years—rich media technology, new mobile and video formats and dynamic creative technology that can take a creative ad concept and automatically bring it to life over millions of websites.

• The industry is literally moving faster as media buyers start to increase their use of real-time bidding (RTB) technology, which allows them to evaluate and bid on ad space on an impression-by-impression basis. We recently undertook an industry study with Digiday, surveying more than 300 digital media buyers, agencies and intermediaries about their thoughts on RTB in the year ahead. Some revealing findings:

• 88% of buyers plan to buy via RTB in 2011, up from 75% last year.
• 47% of media buyers say that the benefits or RTB will increase their overall digital advertising budget this year (16% said it would not, 37% were unsure).
• Spending on RTB is quickly moving out of the "test budget" range: 79% of buyers estimate that more than 10% of their digital display budgets will go to RTB in 2011. 33% estimate that 50% or more of their digital display budget will go to RTB. And 7% estimate 90-100% of their digital display budget will go to RTB.
• 29% of media intermediaries (such as DSPs, ad networks, and exchanges) anticipate their volume of real-time bidding will increase by 100% or more versus last year. 19% believe it will go up by at least 200%.
• More formats are moving to RTB: 34% of buyers say they are extremely or very likely to purchase rich media ads via RTB this year, 32% are extremely or very likely to purchase dynamic creative ads via RTB, 20% are extremely or very likely to purchase mobile display ads via RTB, 18% are extremely or very likely to purchase in-stream video via RTB and 14% are extremely or very likely to purchase mobile rich media via RTB.
• Nearly half (48%) of publishers surveyed say they plan to increase the amount of inventory they will make available via RTB. 28% are still deciding. Only 24% said they were not planning to increase RTB inventory.

We’re seeing this rapid growth and change first-hand. Since we acquired Invite Media in June 2010, the number of advertisers on the platform has doubled; agency spend has grown by almost 300%. And spending on display ads on the Google Display Network is growing more than 100% annually in a large number of countries. Publishers are benefiting from these changes as well (for example, a recent study found that publishers who participated in the DoubleClick Ad Exchange see an average 188% revenue lift when the exchange wins the auction).

In this new era, the most effective campaigns will be driven by marketers who rethink how they connect with people in this rapidly moving industry. Whether it means partnering with technology providers to buy better, or exploring the infinite possibilities of today’s creative units, embracing new media and technology provides a key way for marketers to differentiate and grow their businesses in a new universe.

The future

Unlike the Big Bang, the expansion in our industry is not chaotic or random. We’re moving towards a single platform that seamlessly incorporates the best technologies for planning, buying, serving, creating and measuring display ads; one that will enable marketers to effectively reach and engage people across desktops, tablets, videos, mobile devices and TVs.

Posted by Neal Mohan, Vice President of Product Management

Online ad firm Vibrant was able to build a healthy ad business by delivering contextually relevant text ads when users mouse over specific words within news articles and other content on the Web. Now, the company wants to bring the same contextual relevance to display ads.

Vibrant has rolled out VIA Dynamic, a display ad product that takes into account the subject matter of a particular Web page when deciding which creative placement to serve at a given moment. According to Vibrant, VIA Dynamic can instantly assess a Web page’s content using a combination of semantic analysis, word frequency, demographic information and other factors—and it can then serve whatever creative placement is deemed most appropriate.