Editor’s note: In the second part of an in-depth report about trends in the ad tech industry, Technology Business Research picks the top players among public and private companies in each of seven different categories.
HAMPTON, N.H. – Maximizing ownership of the media technology value chain will provide the greatest business opportunities for most vendors
Companies that combine original content with the ability to monetize via advertising and/or subscriptions will be best‐positioned in the future.
- AD TECH REPORT PART ONE: The future of ad tech
Those that own the infrastructure to deliver content and advertising will maximize revenues and profits. Vendors that deliver original content, targeted ads and reduced ad load will be positioned for an equitable value exchange with consumers. This will offset trends in ad blocking, while investments and alliances with ad fraud specialists will help mitigate potential revenue losses due to weaknesses in the digital ad value chain. As traditional TV and digital channels converge and the vendor ecosystem consolidates, omnichannel will become a reality for marketers.
Top 3 public companies by segment
Based on TBR’s Ad Tech Vendor Benchmark, Ad Tech Customer Research and Ad Tech MarketView Report, these vendors maintain strengths that position them to dominate revenue and profits:
Digital natives: Facebook, Google and Amazon
Telecom operators: Verizon, AT&T and Comcast
CX clouds: Adobe (Nasdaq: ADBE), Salesforce (NYSE: CRM) and Oracle (NYSE: ORCL)
Pure plays (public companies): The Trade Desk, Criteo, Telaria ([NYSE: TRMR] formerly Tremor Video)
As the market evolves, not all vendors, particularly pure plays, will have the resources to maintain the pace of innovation required to compete with enterprise companies. For example, Amazon (Nasdaq: AMZN) maintains leadership positions in e‐commerce and cloud infrastructure services, allowing it to invest in its ad tech unit, Amazon Advertising Platform (AAP).
Walled gardens such as Facebook and Amazon limit effectiveness and value add of independent ad tech vendors. It will be imperative for privately held vendors to forge strategic alliances with global brands, agencies and holding companies that control ad spend and set the stage for integration opportunities.
Top 3 private companies by segment
We’ve seen exits of key vendors (e.g., Sizmek, Rocket Fuel and Turn) at what could be categorized as “fire sale” prices, slightly or significantly below their peak market valuations and well below the multiples venture capital firms aim for when investing (e.g., five to 10 times or higher). Based on insights from TBR’s ad tech research, certain vendors are ripe for M&A. While these vendors may operate in more than one segment, they are categorized based on core business or revenue streams:
Ad‐buying: dataxu, MediaMath and Videology
Ad‐selling/yield management: AppNexus, OpenX and PubMatic
DaaS/analytics: C3 Metrics, Integral Ad Science and OwnerIQ
These M&A candidates could ultimately be viewed as winners or losers based on their respective exits. At first, the number of strategic buyers may seem limited to specific enterprise vendors operating in software, IT services or data services. However, technology continues to transform the way businesses and consumers engage. As more brands increasingly view themselves as technology companies, ad tech becomes a logical extension for adjacent sectors (e.g., consumer electronics, automotive) in which companies must innovate to remain relevant en route to top‐line and bottom‐line growth.
(C) TBR