New research has shown that there were 114 deals within the adtech or advertising technology space in 2019.
The analysis was carried out by global M&A and funding advisors, Results International.
This makes last year the most active since 2016 with a 72% increase from the number of transactions completed in 2018.
A major driver in 2019 was further consolidation in the four historic sub-sectors of adtech: DSPs, DMPs, SSPs, and content recommendation.
Notable deals in the DSP/DMP segments included:
- Video DSP Taptica (acquirer of Tremor’s DSP in 2017) merged with RhythmOne (acquirer of Yume in 2017) in February
- Listed DMP Cxense was acquired by Piano software in a public-to-private transaction in August
- Zeta Global, CRM data vendor turned marketing platform, consolidated distressed DSP and DMP assets from Sizmek in April and IgnitionOne assets in September
- German-based DSP LiquidM was acquired by Smart AdServer, a portfolio company of Cathay Capital, in December.
In the SSP space, Rubicon acquired RTK.IO in October and subsequently merged with Telaria in December for $363m.
Content recommendation platforms also saw considerable consolidation, notably when Outbrain acquired Ligatus in February.
This was followed by the merger of the top two players, Outbrain and Taboola, in October.
Finally, Amazon acquired Sizmek’s legacy ad server, putting it in a better position to compete with Google for advertiser budgets.
Results International is a global M&A and fundraising advisors to the marketing, technology and healthcare sectors.
It also found that video advertising continues to be regarded as one of the most engaging formats.
Together with the continued growth in Connected TV, this led to a number of deals such as LiveRamp’s acquisition of Data+Math in June for $150m; Roku’s acquisition of Dataxu; and Xandr’s acquisition of Clypd in October.
The beginning of 2020 has already seen further consolidation within this sub-sector; with Tremor acquiring News Corp video SSP Unruly for $19m along with a roughly $40m spend commitment.
The research further noted that the largest acquisition in the adtech space this year was Blackstone’s $750m acquisition of Vungle, a mobile advertising firm, in Q3.
This acquisition highlights the growth on mobile gaming and brands’ eagerness to use it. More broadly, it illustrates private equity’s steady increasing interest in adtech.
For example, Providence Equity made the top buyers list with four acquisitions, three of which were bolt-on acquisitions for its portfolio company DoubleVerify, which Providence acquired in 2017. There was also the $222m investment in social media firm Smartly.io in December.
Julie Langley, partner at Results International, said: “Blackstone’s acquisition of Vungle, plus Providence making the top buyers list, highlights PE’s increasing comfort in doing deals in the sector.
“Traditionally, private equity firms were wary of investing in adtech due to the industry’s larger mix of transaction-based revenue and the fact there’s less of a direct relationship.
“In addition, some PE buyers have been put off by increased privacy compliance issues and the dominance of the triopoly.
“However, this has not impeded private equity firms from making investments in sought-after and differentiated adtech assets.
“As Connected TV and video streaming continues to grow, it would not be a surprise to see more activity in this sub-sector this year.
“We should also expect more audio adtech deals in 2020 as audio grows in popularity, particularly through podcasting and the increase use of smart speakers.”
Measurement and analytics
Another area of growth continues to be measurement and analytics, as it enables businesses to achieve the triple objective of a greater need for ROI, increase brand safety and less fraud.
This can be seen by DoubleVerify’s three acquisitions in the space – Leiki, Ad-Juster and Zentricks – last year; and private equity firm O3 Industries’ acquisition of fraud protection and contextual targeting firm Peer39 (a former division of Sizmek).
Last year also saw a number of left-field buyers emerge, mostly within martech. Larger brands are keen to own aspects of their tech stack and take more control of their data in order to improve customer experiences through personalisation.
Nike acquired retail predictive analytics company Celect, McDonald’s acquired Dynamic Yield and Mastercard acquired SessionM.
Walmart continued to build its stack and monetisation capabilities through the acquisition of Aspectiva in February; but also Polymorph Lab and parts of ad sales arm Triad via its subsidiary Sam’s Club.
Langley added: “M&A activity in adtech continued to grow last year, largely driven by ongoing consolidation and restructuring of certain assets.
“However, as firms seek to expand their capabilities, particularly in analytics and video, more consolidation could be expected in 2020.
“PE houses and new entrants are continuing to make it a vibrant market, provided adtech companies have something beyond the ordinary to offer.”