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Great Catch, Perfect Match: Why Companies Crave For AdTech Startups

CEO of Bidease, an AdTech startup on a mission to bring fully transparent, value-driven advertising to the mobile world.

AdTech startups have always stood out from the crowd. As soon as you become a trendsetter and not only outperform your customers' expectations but also implement various innovative features into their daily lives, your advantage over other market players starts to grow exponentially.

In these endless attempts to find the most effective and extraordinary ways to reach company goals, it is very important not to lose your business acumen and be the first one to recognize and get a development masterpiece. As the leader of an ambitious company, you will always strive to increase your capacities and seize opportunities.

Until now, 2020 had been full of all kinds of surprises: The Covid-19 pandemic came out of the blue, the OPEC plus deal was necessary to help ease tensions and the stock market crashed, to name a few. Altogether, they wreaked havoc on the global economy, so it is expected that many investors took a wait-and-see attitude and were in no hurry to make any decisive steps or take on any additional risk.

According to the Luma's Q1 market report for 2020, AdTech saw a decline in deals across the board, with approximately 50% fewer deals relative to Q1 2019. However, despite the massive global shakeup, there were some notable AdTech deals, which took part in the first half of 2020.

Here they are:

- Twitter acquired CrossInstall, a mobile-only DSP and a leading creator of programmatic interactive mobile ads. The deal price wasn't disclosed. CrossInstall uses its own in-house bidder to effectively acquire users and is well known for its various creative opportunities.

- SiriusXM announced the acquisition of Simplecast, a modern platform for podcast hosting and distribution, that also provides the opportunity to measure content. Empowered with the AdTech subsidiary of SiriusXM, a monetization platform called AdsWizz, Simplecast becomes an all-in-one solution that remains the easiest way for podcasters to create, publish, analyze content and generate revenue.

- Tremor International, a global leader in video advertising technologies, acquired Unruly, a programmatic video ad network, from News Corp.

- Media and Games Invest (MGI) acquired the assets of Verve, a location-based mobile marketing platform that combines location intelligence and premium inventory with display and video advertising experiences. 

And here are some remarkable AdTech deals of 2019:

Blackstone, one of the world's leading investment firms, acquired Vungle. This deal was a great synergy of the world-known investment company and the performance marketing platform that specializes in in-app ads.

- IronSource raised between $400-450 million in funding. IronSource is one of the leading video ad networks and a well-known UA source for mobile app publishers. The money was invested by CVC, which has gotten a minority stake in the business in this deal, valuing the company at over $1 billion.

- Two AdTech startups — Taboola and Outbrain, which operate advertising based content recommendations engines for publishers — merged in an $850 million deal. The combined audience scale and reach increasing will give them an opportunity to continue making ad revenues on their own sites, and off the networks of companies like Google, Facebook and Amazon.

- Nike acquired predictive analytics AI platform Celect to bolster its direct-to-consumer strategy. Integration of this technology into Nike's mobile apps and website will help the worldwide famous shoemaker to better predict the preferences of its consumers. Like what exactly, when and where (via store, app or site) a specific customer can purchase.

The above-mentioned deals once again confirm major trends in the AdTech industry. So here they are:

As everything in advertising is strictly related to consumers and a better understanding of a target audience, brands recognize some growth points and bring their attention to them.

Using third-party data can lead to unpleasant consequences, since getting this information does not always happen with the consent of the consumer. In this regard, the collection, systematization and storage of users' data go to a new level, and first-party data is becoming even more important due to existing and upcoming privacy regulations.

ML and AI technologies are gaining even more popularity in order to get the most from customer data. These technologies not only help to run programmatic advertising and optimize bids, but they also help to automate consumer behavior tracking. And knowing your audience helps to show them the most relevant ads in the most relevant sources.

Creating unique and high-quality creatives is already as important as user acquisition. Consumers are exposed to advertising 24/7. While brands have been improving their UA sources, the creative part was forgotten and became pretty monotonous, which led to banner blindness. Many advertisers are aware of this issue and try to give creativity a second wind.

Merging CDPs and anonymous DMPs is becoming a priority and hopefully will give brands and marketers a better customer journey understanding.

The AdTech market will always have something to offer to brands and advertisers. And there is no doubt that it will continue the exponential growth. One of the main reasons for it is that Facebook and Google have been monopolists for too long, and now businesses are looking to diversify their ad spend and are open for new opportunities to grow (i.e., programmatic).

Just in the United States, programmatic ad spending is expected to reach $78.943 billion in 2020, which is 85% of all digital ad spending.

In comparison with 2019, 2020 seems to face some kind of hurdle in the AdTech space in terms of deals. However, wherever there is uncertainty, there is an opportunity. In the upcoming months, I believe we can expect to see a number of M&A deals. As the market is becoming more and more advanced and sophisticated, it seems that more and more companies are looking to join forces and become stronger and better together. I believe this will be the primary trend for 2020 — more consolidation and M&A activity instead of big-investment deals.

Originally published on Forbes

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