The digital ecosystem is bracing for a potential bonanza in 2025, according to Terence Kawaja, founder and CEO of LUMA Partners.
It may have been a bumpy couple of years – but the industry’s leading deal-maker says the economy is back.
In this video interview with Beet.TV in advance of POSSIBLE 2024 in Miami April 15-17, Kawaja illuminates the future of ad tech and MarTech amidst a recovering market landscape.
Navigating Through Macro Uncertainties
“You had almost unprecedented macro uncertainties,” he recalls, outlining factors that included “rising interest rates, the scare inflation, and the risk of a coming recession,” not to mention “geopolitical tensions with two wars.”
However, with a more stable environment, he observes a marked shift, “Interest rates feel like they’ve peaked. Inflation has been somewhat tamed, and the stock market got the memo because it’s totally ripping.”
This newfound stability is fostering confidence for the year ahead. “Dialogue is up and so we’re hopeful that ’24 we’ll see a return to more normal-course deal environment,” Kawaja states, pointing towards the horizon of 2025 with a twinkle of anticipation for the post-cookie era. “Once the cookie deprecation and signal loss manifests and we then have a game plan as to where the industry’s going, we could see a boom in M&A in ’25.”
Stabilizing Valuations and Corporate Efficiency
Kawaja doesn’t mince words when discussing the rollercoaster of valuations that have impacted the tech sector. “Valuations have stabilized after the downturn in ’22,” he says, noting the rebound in public company stock prices.
He is quick to highlight a fiscal discipline that has emerged from the tumult, “The average public company in tech brought up their EBITDA margins by almost seven percentage points, 700 basis points. That’s almost unprecedented.”
Drawing from cultural touchstones to illustrate the sweeping changes, Kawaja likens the cost-cutting and implementation of AI to a corporate version of a popular weight loss drug, “Scott Galloway posted something… (calling it a) corporate ozempic. And you can really see it in the stock prices; they’ve taken off.”
The Digital Ecosystem’s Aggregated Power
Kawaja’s insights extend beyond financials, touching on the concentration of market power within the digital realm. “Seven companies, the magnificent seven, the big digital companies, plus Tesla and Nvidia now comprise almost one third the market capitalization of the S&P 500,” he says, emphasizing the disproportionate influence wielded by these tech titans.
Looking ahead to Kawaja’s own Luma’s Digital Media Summit slated for May 14th, he outlines what attendees can expect from the conclave of digital leaders. “It’s a collection of hundreds of CEOs in the digital ecosystem and other leaders from large companies really to get together, talk about the incredible attributes that this sector almost uniquely has,” he says.
The summit will delve into the “green shoot areas of CTV commerce media,” as well as “AI and the creator economy,” amidst the ever-present dynamism of the sector.
