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AdTech. AdTech. AdTech.
Thanks for being badly wrong, Bob.
Bob Hoffman once wrote – “Adtech has proven to be an utter disaster. Unless you are Google, Facebook, or WPP, adtech is a monstrosity that is stealing your money, harming your business, threatening your security, and alienating your customers.”
Thankfully, the majority ignored this ill-thought through quip and the ensuing war against AdTech, as AdTech has & continues to underpin the growth of the advertising sector.
The role of AdTech
Advertising technology is simply a way for advertising to be bought and sold. It’s the software that buyers and seller’s login to. You don’t need me to give you some pithy examples of where technology has revolutionized an industry, but advertising has certainly been *another* industry which has embraced and benefitted from the technological revolution.
The shots that are fired at AdTech are often aimed with both eyes closed at OpenRTB. A real-time protocol for information sharing via API’s – nothing controversial in theory. However, there have been actors over the years who have used this democratized data to run bad ads, over-target, rip off user data plus many other poor practices. As positive & optimistic as I am to the power and potential of AdTech, I am not naive enough to think that there are no bad actors, however, either through regulation, monopolistic moves (sigh) or rules of the free market these will be removed over time (hallelujah). But in the eyes of the simple-minded, this is always too slow. We will get there, and today there are proactive approaches brands can take to mitigate risk.
Two cents – if you see an industry commentator talk about AdTech, look at their background, see if they understand the role of technology in digital economics, or whether they just want to be controversial about the space without fully understanding it (I have offered multiple free sessions to some of these commentators and they have all but one turned them down – some people don’t want to learn, which is a very sad state of affairs).
The finances of AdTech
If you follow ExchangeWire, AdExchanger, VideoWeek, AdWeek, WSJ, Digiday, Forbes etc. you’ll be hard-pressed to have missed the volume of M&A/IPO moves made this year for AdTech companies. Theories range from there being easy to access low interest capital, or investors wanting to diversify their portfolio, through to, and Bob Hoffman, you better believe it, AdTech being a genuinely investible long-term asset. An asset which powers an increasing amount of a $650bn (and growing) market – seems sensible from an investment case to me.
I often get asked which AdTech M&A/Investor/IPO moves interest me the most, see below.
The Trade Desk launching TD7
$TTD listed at $2.92 a share in 2016 and is now $88 a share in 2021. Impressive! They have executed on their strategy so well, despite many industry sized headwinds. They recently created a venture capital arm called TD7 and invested in algorithmic optimization specialists, Chalice, as their first investment. Fascinated to see where this goes, who they invest in and how successful it is.
MediaOcean acquiring FlashTalking
MediaOcean have made a few acquisitions in recent years, and whilst they are predominantly known for being a media booking system, it’s interesting they acquired FlashTalking, an ad-server which has minority share of the ad-server market dominated by Google. Integrating an ad-server and booking tool seems sensible (particularly for transparency) but does that mean they’ll take out an SSP for end-to-end transparency, or will that create too much of a conflict? Basically, I could come up with a bunch of scenarios with where they may go, so one to keep an eye out for!
Integral Ad Science acquiring Publica
IAS IPO’d at the end of June and at the time of writing have a $2.63bn market cap. Their first acquisition with their newfound liquidity is Publica for $220m, announced this week. Publica provide tools for CTV apps/broadcasters to monetize effectively without compromising user experience – CTV is a growing segment of the industry, so getting in on the technological infrastructure early seems smart (I have met the Publica team a couple of times and think they’re great fwiw). IAS also acquired Amino Pay earlier in the year to add in supply chain transparency to their existing fraud/viewability/contextual tools. It’s quite the amalgamation of tech they are bringing into the IAS fold – again, fascinated to see what this looks like in the go-to market strategy in the coming months.
Two cents - one of my promises for this newsletter was that it wouldn’t take long to read, and this section could have been 20+ moves, but expect to see way more deals this year, and not because of distressed post-covid assets but because AdTech is genuinely value adding.
The future of AdTech
There’s so much going on with AdTech, it’s exciting to see (literally) every week which companies are consolidating and/or taking on investment for growth.
I recorded a podcast with Ciaran O’Kane, Founder of First Party Capital – a European investment firm for AdTech – about the industry. We discuss the different funding models in play, what interests the First Party Capital investors and the role of Google. Check it out here - https://shows.acast.com/the-adpod/episodes/08-adtech-ciaran-okane
Despite the tectonic industry shifts, AdTech keeps marching on. Embrace & enjoy it – that includes you, Bob.