Myth buster: Scrutinizing the fortunes of ad tech on the public markets

Ad tech is arguably one of the most polarizing cornerstones of the marketing industry.

While some herald it as the future of the industry, others decry it as a major threat to civil liberties given the abuses of vast sums of online user information — the cause of laws such as GDPR.

Meanwhile, there are those that denounce ad tech, or programmatic, as nothing more than spiel conjured up to talk brands’ marketing departments into spending (perhaps even wasting?) more of their media budgets. There’s a reason some agencies and marketers complain of an “ad tech tax.”

Last year saw a flurry of ad tech companies debut on the public markets, either via way of an initial public offering or special purpose acquisition company (SPAC), indicating a rapprochement between Wall Street and the sector. But according to LUMA Partners, which states there are now 24 public companies in the sector, the market performance of such companies remains largely flat compared to 2020.

Currently, there is a widespread perception the window to join the latest tranche of public ad tech companies is coming to a close, or at least approaching a hiatus. So, with the market seemingly at a fork in the road, Digiday took the opportunity to scrutinize some perceived ‘wisdoms’ in the market.

Myth: No more ad tech IPOs — such stocks are all garbage

Seasoned observers of the sector will tell you the ‘class of 2021’ was not the first rodeo for ad tech on the public markets. During the early-to-mid 2010s we saw the likes of Rocket Fuel fly high on the Nasdaq, only to crash back to earth (along with others).

Lemonade Projects recently analyzed the performance of 18 public ad-tech companies after their latest wave of quarterly earnings calls and found the vast majority of them are hovering at a 52-week low. Tom Triscari, an economist at the consulting firm, noted how there were nine “unicorns”, a.k.a. companies with a $1 billion-plus market capitalization, although he does note that in many cases “words like ‘premium’ or ‘transparency’ lost all their meaning in Programmaticland [sic] long ago.”

I think there’s going to be a repricing, a lot of companies are overpriced

Ciarán O’Kane, general partner, FirstParty Capital

While such assessments do help to bring some sense of much-needed rational thinking to the grandiose statements public companies make to the market, others note how analysis of recent ad tech stock prices, plus a lag in the pace of IPOs, requires some balancing of external factors into the equation.

Terence Kawaja, CEO of LUMA Partners, said those stock price trends reflect macroeconomic issues, such as increases in the cost of borrowing and uncertainties stemming from the conflict in Eastern Europe, which are impacting all technology stocks, not …read more

Source:: Digiday