2021 was dropped at you by the letters M&A.
After a pandemic-induced lull in deal exercise in 2020, final 12 months was wall-to-wall consolidation throughout the media and advertising and marketing know-how sectors.
Total deal-making exercise in 2021 was up greater than 82% 12 months over 12 months, based on LUMA’s 2021 market report launched final week.
And you possibly can count on extra to come back in 2022, stated Conor McKenna, a director at LUMA.
“Based on the conversations we’re having and the announcements you’re already seeing in the market, it doesn’t feel like we’re slowing down anytime soon,” McKenna stated.
The new 12 months is lower than two weeks outdated, and we’ve already seen acquisitions by Integral Ad Science (of French contextual promoting startup Context), Smartly.io (of London-based Google promoting specialist Ad-Lib.io) and Magnite (of cryptographic viewers information startup Nth Party).
On Monday, T-Mobile acquired rideshare advert community Octopus Interactive.
The two principal classes fueling deal exercise
The majority of M&A taking place throughout media, advertising and marketing and advert tech falls into six principal buckets: cellular apps, information and identification, commerce media, audio, the continuing maturation of the programmatic ecosystem and, after all, linked (or, as LUMA likes to seek advice from it, “convergent”) TV.
But it was cellular apps and CTV that spurred a few of the largest offers in 2021.
App assault
On the app entrance, “people finally came to realize that gaming is a huge space with massive growth that generates a ton of consumer attention,” McKenna stated. “And a lot of that engagement is driven by ad-supported models.”
AppLovin is probably the most salient instance of cellular advert tech making good. The firm has been on a content-buying spree – (see its 2020 acquisition of Machine Zone) – and an advert tech shopping for spree.
AppLovin spent roughly $1 billion apiece in 2021 to accumulate cellular measurement platform Adjust in February and cellular advert change MoPub from Twitter in October.
In the midst of all that deal exercise, AppLovin went public in mid-April.
“We’re seeing mobile ad tech companies building themselves into massive entities and really starting to bulk up,” McKenna stated.
In addition to AppLovin, ironSource went public in June, and Digital Turbine, already a public firm, made three advert tech acquisitions in fast succession final 12 months: AdColony in February adopted by cellular DSP Appreciate and app monetization platform Fyber in March.
“Similar to CTV, the growth we’re seeing in the mobile app ecosystem is built on consumer trends that are not going away, which is creating a big opportunity in terms of advertising and monetization,” McKenna stated. “The landscape also continues to shift, as we’ve seen with the IDFA, and when companies need to move quickly, they will often turn to M&A.”
CTV eats the world
The want to maneuver shortly can be one of many principal elements driving the breakneck tempo of deal exercise within the CTV ecosystem.
“SVOD, AVOD, FAST – however you want to cut it, CTV is growing rapidly, and a lot of that growth is accruing to the advertising side of things,” McKenna stated.
Subscription video on demand (SVOD) generated quite a lot of the preliminary development in streaming. But as CTV matures, subscription fatigue is resulting in an embrace of ad-supported streaming content material – and buyers and analysts are taking discover, he stated.
As advert tech firms hit the general public market over the previous 12 months, “CTV became part of the required narrative,” McKenna stated.
Which begs the query of whether or not a few of the pleasure round CTV is de facto simply hype in disguise.
At the start of 2021, tech shares have been extraordinarily frothy, and it was sufficient to easily point out “CTV” on an earnings name to bask within the channel’s mirrored glow.
But that’s now not the case, McKenna stated. The market has began to develop up.
“Some of that shine and sheen you’d get just from saying ‘CTV’ without being able to back it up with results is over,” he stated. “Companies have had three or four quarters to mature, investors have gotten smarter and analysts are asking the right questions – and so companies are being judged on their capabilities and their results rather than just talking to talk.”
And with a view to get these capabilities shortly, public firms specifically are utilizing their multiples to develop inorganically. Just have a look at Magnite, with its acquisitions of SpotX and SpringServe; Blackstone’s majority stake in Simpli.fi; and Integral Ad Science’s buy of Publica.
“There’s still so much change on the horizon that we’re not even close to the end when it comes to CTV – and it’s still just a fraction of linear ad spend today,” McKenna stated.