Ad-Tech Consolidation is Over
The much heralded era of consolidation of the thousand plus companies in ad-tech is over. An era of partnership has begun. The winners now will be those that integrate to save margins, offer combined capabilities, and remove friction for all who participate.
The long awaited consolidated to clean-up the number of advertising technology is over. The industry demanded consolidation. Acquisitions activity concluded with sale of many well respected ad-tech companies to domestic advertising based businesses as well as sales to a handful of European and Asian conglomerates who needed ad-tech to bolster their legacy capabilities. This consolidated completed with a bang marked by TubeMogul and MOAT acquisitions and with a handful of Chinese acquisitions in 2016.
The punctuation mark to consolidation and current sentiment is the continued dominance of Google and Facebook — both outpacing everyone not only in ad dollars spent on their platforms but in their respective innovation to capture more consumer attention to their screens than ever before. Their fly wheels are spinning the fastest.
The supply of capital to ad-tech funding also dried up significantly over the last 12 months — there will be fewer ad-tech companies to replenish the LUMAscape moving forward.
The winners in the consolidation were the companies that survived the attrition. These companies had a few common characteristics: scale, mobile first, data differentiation, and profitability. For those left out of the consolidation, partnerships are the only way to survive in this rapidly maturing industry.
Partnerships allow for efficiency among duplicate capabilities for advertisers and a removal of certain frictions for the publisher and ultimately the end consumers. The race to the bottom on the ad experience can be alleviated, but not solved, with co-operation among the demand and supply side of ad-tech. From a consumer point-of-view, we want relevant, engaging, helpful advertisements to augment our exchange of attention. Maybe we consumers and advertisers don’t need more digital point solutions to serve or view an advertisement?