Despite lingering market uncertainty, there is sustained optimism for the need for advertising technology to enable scale and measure effectiveness, particularly as a factor of increased spending in 2024 mainly from major upcoming events like the Summer Olympics and the US presidential election.
By Aron Bohlig, Uren Dhanani and Rohan Bhatia, ComCap
Rapid macro and micro sector advancements are helping drive increased demand and consolidation within adtech. High demand for more privacy-centric advertising, increasing video and mobile-based advertising, and robust capabilities to support large-scale applications (from quicker turnaround in AI-driven content) is translating to larger consolidation within the sector, specifically focusing on rapidly growing subsectors such as ConnectedTV (CTV), Digital-Out-Of-Home advertising (DOOH), and Retail Media Networks (RMN).
From an analysis of investment activity into adtech companies for 2023 in ComCap’s latest adtech report, the following key areas have come to light as bearing the most interest from strategic and financial investors:
- Ad networks such as Topsort, AdStake, and VideoAmp made up 40% of all adtech investments in 2023
- Demand-side platforms (DSPs) including DOOHs and demand-side technology providers, such as OneScreen, Intent.ai, and Adimo made up 28% of all adtech investments in 2023
- Supply-side platforms (SSPs) accounted for 15% of all adtech investments
- The remaining 25% of adtech investments in 2023 were split among Data Management Platforms (10%), Creative Optimization Tools (5%), Mobile Adtech (8%) and Attribution and Analytics (3%)
While the above represent minority investments in adtech providers, recent activity also supports financial investors' inclination to participate in majority deals within this sector.
With the expansion of the CTV ad industry, driven by rising ad rates and demand, there is an expectation for more investor activity to integrate adjacent technologies for a comprehensive offering. Areas being focused on within CTV advertising are targeting, analytics, ad-serving platforms, content integration, cross-device tracking, and measurement. These enhancements will empower advertisers to maximize campaign potential and reach a broader audience.
DOOH is experiencing rapid growth with global spending in the sub-sector accounting for 25.4% of total OOH spending in 2023, an increase from 17.8% in 2020. The market's expansion is primarily fueled by the rapid growth of programmatic DOOH, with real-time bidding opportunities now becoming available via mainstream DSPs.
Within RMN, which continues to witness strong growth in recent years due to the shift towards using first-party data for advertising, the industry appears poised for consolidation. This trend is notably illustrated by recent transactions, such as Neptune Retail's acquisition of Quotient Technology ($506MM, 2023), Criteo’s acquisition of Brandcrush (2023) and CommerceHub's acquisition of ChannelAdvisor ($733MM, 2023).
Overall, there is general market optimism for the sustained growth in the adtech space, and investors that are ahead of the curve are already looking to take advantage and continue activity in the space.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.