2021 has been brought to you by the letters M&A.
After a pandemic-induced lull in 2020, the past year has seen consolidation across the media and marketing technology industries.
Total trading activity in 2021 grew by more than 82% year-on-year, according to LUMA’s 2021 market report released last week.
And you can expect more to come in 2022, said Conor McKenna, director of LUMA.
“Based on the conversations we’ve had and the announcements you’re already seeing in the market, it doesn’t feel like we’re slowing down anytime soon,” McKenna said.
The new year is less than two weeks away and we have already seen acquisitions by Integral Ad Science (from French contextual advertising startup Context), Smartly.io (from London-based advertising specialist Google Ad-Lib.io) and Magnite (from Nth Party cryptographic audience data startup).
On Monday, T-Mobile acquired the carpool advertising network Octopus Interactive.
The two main categories fueling transaction activity
The majority of mergers and acquisitions that occur in media, marketing, and ad technology fall into six main categories: mobile apps, data and identity, business media, audio, the continued maturation of the programmatic ecosystem, and of course. , connected (or, as LUMA likes to refer to it, “converge”) TV.
But it was mobile and CTV apps that drove some of the biggest deals in 2021.
On the apps front, “people have finally realized that gaming is a huge space with massive growth that is generating a ton of consumer attention,” McKenna said. “And a lot of that engagement is driven by ad-supported models.”
AppLovin is the most successful example of mobile advertising technology. The company has embarked on a content buying spree – (see its acquisition of Machine Zone in 2020) – and ad tech buying spree.
AppLovin spent around $ 1 billion each in 2021 to acquire the Adjust mobile measurement platform in February and Twitter’s MoPub mobile ad exchange in October.
Amid all this commercial activity, AppLovin went public in mid-April.
“We are seeing mobile ad technology companies forming into massive entities and really starting to ramp up,” McKenna said.
In addition to AppLovin, ironSource went public in June, and Digital Turbine, already a public company, made three ad technology acquisitions in rapid succession last year: AdColony in February, followed by mobile DSP Appreciate and the platform. -Fyber app monetization form in March.
“Similar to CTV, the growth we’re seeing in the mobile app ecosystem is driven by consumer trends that don’t go away, which creates a great opportunity for advertising and monetization,” McKenna said. “The landscape also continues to change, as we’ve seen with IDFA, and when companies need to act quickly, they often look to mergers and acquisitions. “
CTV eats the world
The need to act quickly is also one of the main factors behind the breakneck pace of transactions in the CTV ecosystem.
“SVOD, AVOD, FAST – whatever way you want to cut it, CTV is growing fast, and a lot of that growth is coming down to the advertising side of things,” McKenna said.
Subscription video on demand (SVOD) generated much of the initial growth in streaming. But as CTV matures, subscription fatigue is leading to adoption of ad-supported streaming content – and investors and analysts are taking note, he said.
As ad technology companies have reached the public market over the past year, “CTV has become part of the required narrative,” McKenna said.
Which begs the question whether some of the excitement around CTV is really just hype in disguise.
At the start of 2021, tech stocks were extremely foamy, and it was enough to simply mention “CTV” on an earnings call to bask in the reflected glow of the chain.
But that’s no longer the case, McKenna said. The market has started to develop.
“Some of that shine and that shine that you would get just by saying ‘CTV’ and not being able to confirm it with results is over,” he said. “Companies have had three or four quarters to mature, investors have gotten smarter and analysts are asking the right questions – so companies are being judged on their ability and performance rather than just talk for the sake of it. “
And in order to get these capabilities quickly, SOEs in particular are using their multiples to grow inorganically. Just look at Magnite, with its acquisitions of SpotX and SpringServe; Blackstone’s majority stake in Simpli.fi; and the purchase of Publica by Integral Ad Science.
“There’s still so much change on the horizon that we’re not even near the end of the day when it comes to CTV – and it’s still only a fraction of linear ad spend today,” McKenna said. .