Ad Tech Consolidation
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This document discusses consolidation in the ad tech industry. It notes that Google and Facebook now own 85% of internet advertising growth. With decreased VC investment, only the best of breed companies will survive. Factors driving consolidation include a lack of market maturity, rise of programmatic advertising, limited market share, fragmentation, and fraud. Options for companies include M&A, private equity investment, or finding profitability. The document recommends investing in companies with unique value propositions, defensible business models, and profitability. Recent ad tech acquisitions are also summarized.
Ad Tech Consolidation
- 1. Ad Tech Consolidation Vail Roundtable August 2017 @charityhuff Maroonventures.com
- 2. Representing our media, adtech clients, and our own ventures, Maroon has managed many successfully M&A transactions through our tenure. Managing Partner, Charity Huff
- 3. Google & Facebook own 85% (and rising) Share of the Internet Advertising Growth $0 $5 $10 $15 $20 $25 $30 $35 2015 2016 2015 2016 2015 2016 20% YoY 62% YoY 9% YoY Mary Meeker: Kleiner Perkins Internet Trends 2017 Google FB Other
- 4. Only Best of Breed will survive
- 5. Factors Leading to Consolidation Since the spike in VC investment in 2013, investment dollars are passing on the majority of this industry in favor mid-cap, more established business models. 01 Lack of Market Maturity 02 Rise of Programmatic 03 Limited Market Share 04 Fragmentation 05 Fraud Venture Beat, Oct 2016
- 6. Options M&A 217 adtech/martech deals in the 1H2017 RAISE RAISE RAISE Private equity investment in adtech grows to 15% in Q2 2017 FIND PROFITABILITY Few ad tech companies find profitability thanks to a crowed space competing for a shrinking 15% total market share Results International, Julie Langley, January 2017 CheifMarTech.com Ad Exchanger, August 2016 Global adtech and martech M&A levels for H1 2017 confirm consolidation
- 7. “No Man’s Land” Opportunity There are early stage, promising adtech/martech companies generating $1-10M actively seeking strategic investment and/or acquisition. Sweet Spot Companies are facing the reality that their run-rates now exist on a shorter timetable. 48% 44%Private, Investor- funded Private, self funded 7% Public CheifMarTech.com HALF THE MARKET IS MADE UP OF “NICHE” PLAYERS WITH LESS THAN $100 MILLION IN REVENUE
- 8. Invest Smart Look for best-of-breed User Base Accretive to your Core or Emerging Business Value Chain Defensible Value Proposition Profitability
- 9. Unique Value Proposition Don’t Invest in ”Me Too” User Experience Data Rich Self-Serve Scalable Efficient Differentiated suite of features Multiple software services lines Maximize spend Reach the right audience, at the right time with the right message Moving away from managed services Full transparency; no more black box arbitrage Automation Machine learning Consolidate tools set within a single platform Margin sensitives
- 10. Data driven: Right content, right place, right time Personalization Consumers are moving away from: Search, Find, Obtain to ”I want” Search is Shifting Generational shift in media consumption Agencies are seeking a full adtech stack to serve their clients, create effeicincies User Experience M. Meeker’s Insights Mary Meeker: Kleiner Perkins Internet Trends 2017
- 11. $35-$40M AI-powered marketing platform that drives relevant interactions with users at every touchpoint, increasing engagement, retention, & LTV. Zeta Global/Boomtrain Assumed ownership in the YP/Dex merger Mobile location data for predictive analytics in advertising, incorporate over 1,000 behavioral attributes that are extracted from location data. Real-time bidding ad platform targets and serves the ads through mobile ad exchanges, acting as a Demand Side Platform (DSP) with brand and agency clients bought from YP.com who’d acquired in 2014. Verve/Sense Networks $20M cash Wi-Fi customer analytics and location-based marketing solutions for brick-and-mortar retail stores. Expands the types of business marketing services Yelp already offers beyond those that are focused on customer acquisition, to also include those that help businesses with customer retention and loyalty. . Yelp/Turnstyle Solutions Recent adtech/martech Acquisitions
- 12. Recent adtech/martech Acquisitions Raised $4.2 in 2 rounds prior to acquisition Location and reputation mgmt SaaS solutions enable businesses to manage their location data and measure consumer engagement. SweetIQ/Gannett $850M Measure whether people see and interact with online ads, increasingly important given advertiser concerns around viewability, fraud, and trust. Oracle/Moat $37.7 Allows any SMB build an app, and enables mobile websites to behave as native apps, automatically generate and manage a mobile optimized website for SMEs, directly on a phone. Endurance International/ AppMachine
- 13. Good Time for Buyers Since the the waning years of the VC Boom, valuations have flipped from a revenue multiplier to a smarter EBITDA valuation Shop for Profitability 4-6x Best of Breed User Experience Differentiated Tech
- 14. Ad Tech Consolidation Vail Roundtable August 2017 @charityhuff Maroonventures.com 303-886-6816 Maroonventures.com