Market Spotlight: Ad Tech

Editor's Notes

• #6: Thanks Dan So looking at advertising spending in aggregate, it’s projected to grow steadily in the coming years. Now this includes all formats- including digital (online and mobile), magazines, newspapers, outdoor, radio and tv.
• #7: And out of those categories, mobile is projected to grow tremendously in the coming years. And The number that’s interesting to look at is in 2015, where the proportion of mobile to desktop search ad spending exceeds 50%.
• #8: As you can see more clearly in this graph, the singularity where mobile search volume overtakes desktop is expected to occur in 2015.
• #9: And the newest figures suggest total mobile ad spending worldwide is projected to grow at double digit rates well into 2019, and may take up to a quarter of total media ad spend by then.
• #10: Of course, Mobile is especially important to companies like Facebook and Twitter, where a greater proportion of ad revenue is coming from mobile. While Facebook’s total Q1 ad revenue grew 46% year over year and Twitter saw an increase of 72%... Ad sales for mobile accounted for 73% and 89% of Facebook’s and Twitter’s total ad sales respectively.
• #11: So we’ve established advertising spending (particularly in mobile) is growing, so how does that look on the deal side? Well as you can see here, 2014 was a bonanza year for AdTech M&A, both in terms of deal value and count, which reached record highs. Q1 2015 is a slightly different story… so there is a drop off in deal value, which may be due to the weak adtech IPO market in 2014, which dragged down valuations somewhat. However, deal count in Q1 was still considerably high, meaning a larger number of smaller deals is taking place, which is great news for smaller adtech companies.
• #12: Deal values in Q2 should shoot up considerably, as the $4.4B acquisition of AOL alone should bring deal values back up to trend.
• #13: Looking at the top strategic technology buyers of 2014, many of the names you see here were involved in adtech deals. We saw traditional media agencies like WPP and Publicis expand their reach internationally by buying digital marketing agencies in China, Russia and Latin America. We also saw tech companies like Facebook, Twitter, and Google who make most of the money from advertising, making major investments in adtech. Similarly, Yahoo has been making big plays to accelerate their efforts in mobile and video advertising.
• #14: Looking at the top strategic technology buyers of 2014, many of the names you see here were involved in adtech deals. We saw traditional media agencies like WPP and Publicis expand their reach internationally by buying digital marketing agencies in China, Russia and Latin America. We also saw tech companies like Facebook, Twitter, and Google who make most of the money from advertising, making major investments in adtech. Similarly, Yahoo has been making big plays to accelerate their efforts in mobile and video advertising.
• #15: Looking at the top strategic technology buyers of 2014, many of the names you see here were involved in adtech deals. We saw traditional media agencies like WPP and Publicis expand their reach internationally by buying digital marketing agencies in China, Russia and Latin America. We also saw tech companies like Facebook, Twitter, and Google who make most of the money from advertising, making major investments in adtech. Similarly, Yahoo has been making big plays to accelerate their efforts in mobile and video advertising.
• #16: … An example of which is their acquisition of BrightRoll, the largest independent video ad network, late last year for $640M. This deal would make Yahoo one of the largest video advertising platforms in the US.
• #17: And their acquisition of Flurry earlier in 2014 was another major deal. Yahoo was especially interested in the wealth of audience data that flows through Flurry’s app analytics service, which should give them insight into consumer behavior on mobile apps and enhance their targeting capabilities.
• #18: Similarly, Rocket Fuel finally ended their hunt for a data management platform by purchasing DSP/DMP [x+1] for $230M- The data from x+1’s platform should enhance Rocket Fuel’s media buying algorithms and boost their offline targeting capabilities.
• #19: Facebook also bolstered their advertising business by acquiring LiveRail, which should make them more competitive against Google and AOL in the video marketplace, as LiveRail’s technology allows Facebook to extend the purchase of ad inventory outside the walls of the Facebook environment.
• #20: Another interesting acquisition was Comcast’s purchase of FreeWheel, which is known as the go-to ad serving platform for TV networks streaming online. Naturally, Comcast is interested in owning the technology for its own video platform and network partners.
• #21: In addition to nabbing ad networks Apprupt and AdVine, Opera’s acquisition of AdColony for $350M last June was their largest in a series of purchases to further their advertising business. AdColony’s technology, which enables fast-loading of video ads on mobile, should allow Opera to embrace more advanced advertising formats that command higher payments from brands.
• #22: Looking at deals this year, Twitter picked up three adtech companies. A couple weeks ago they paid $532M in stock to acquire digital ad platform and retargetter TeleApart. This is the largest deal Twitter has done to date and places TellApart’s market cap above most public companies in the space, including Rocket Fuel, Tremor Video and Tube Mogul. They also added a new stream of revenue by acquiring Niche, a startup that offers analytics tools to social media creators and brands that want to leverage them in their advertising. They also acquired Indian adtech startup ZipDial for an estimated $30M, which will allow Twitter to deliver ads over the phone to users in developing markets with little or patchy internet connectivity.
• #23: And of course, there is the AOL/Verizon megadeal. This was an important deal for a couple reasons. First, the combination of Verizon’s customer data and AOL’s capacity to serve ads should improve advertisers’ ability to get the right ads to the right people. After all, the most successful companies in mobile advertising, i.e. Facebook and Google, tend to be those that know a lot about their customers. Second, combining a leader in mobile with a leader in video and programmatic advertising has the potential to create one of the more powerful media technology companies out there. …Of course it remains to be seen how well they will integrate, but will serve as an interesting case study nonetheless.
• #24: Looking back on 2014, these were some of the more interesting deals by category, in addition to the ones we covered just now. There was increased M&A activity in almost all categories as larger companies consolidate, particularly in ad networks and exchanges as well as smaller analytics and retargeting outfits. Looking forward to 2015, deals of all sizes are in play as buyers still seek access to new markets abroad, technologies that boost mobile advertising capabilities, and innovative, new ways to reach their desired audiences. Now I’m going to hand it back to Dan and our panel of luminaries, which includes executives from some of the fastest growing adtech companies so they can cover this market in more detail.