2022’s dealmaking is already underway, will it be a year of smaller, better, cheaper?

By Ronan Shields

One safe prediction for 2022 is that there’ll be more dealmaking in the ad tech sector. Mergers and acquisitions are continuing at a relentless pace after the bumper year that was 2021, but there will be fewer, larger deals left to be done.

Many of the splashiest companies have been snapped up, while those that wanted to go public have either done so or are well on their way. It also doesn’t help that ad tech bosses have a laundry list of distractions to keep them from these deals: growing scrutiny from advertisers, more competition among publicly traded companies for media dollars, the knock-on effect of inflation to name a few.

The window for deals is open but not as wide as it was last year when there was a glut of hairy, strategic moves made.

The deals so far …

Expect more deals like those that have already been announced since the turn of the year: Integral Ad Science acquired Paris-based content classification company Context, Human (formerly White Ops) raised $100 million, and now Magnite has acquired Nth Party, a startup specializing in secure audience data-sharing and analysis. Meanwhile, social marketing company Smartly.io this week announced it’s writing a $100 million check for Ad-Lib.io in a bid to broaden its competencies on the Google marketing stack.

They’re all less glamorous than the flurry of activity that defined 2021 but more focused. The rate of ad tech companies debuting on the public market, on the other hand, is likely to cool. In fact, they have been doing so ever since the fall. There were only three companies to go public during the third quarter versus 15 over the first, per investment bank Luma Partners.

“You’re already starting to see the makeup of acquisitions shift toward smaller deals,” said Abeed Janmohamed, founding partner of growth consultancy Volando. “Based on the conversations we’re already having, it wouldn’t surprise me if deal sizes continued on this trajectory where they pursue deals that are more capability and people-focused. The reality is a lot of these larger companies already have the back office functions sorted and have already covered off the areas where they can drive economies of scale.”

Not to say there isn’t scope for bigger deals. Microsoft’s purchase of Xandr proves otherwise, as does MediaMath’s exploration of a potential sale that could result in a behemoth. Given the fragmented nature of the ad tech industry, the need for continued consolidation still exists.

Bifurcation of the open web

Ciarán O’Kane, CEO WireCorp, and general partner at start-up investment fund First Party Capital told Digiday that one impact of the latest wave of ad tech M&A will be the erosion of scaled audience buys across the open internet. He further predicted this will result in a bifurcation of the open web. In one camp there will be “utility publishers” that will seek to outsource their ad tech capabilities, while …read more

Source:: Digiday