A wave of consolidation in the advertising technology industry will soon eliminate the majority of players in the space. Some of the biggest ad tech companies that went public during the ad tech boom around 2013 now trade in the single digits.
Why this is happening: Ad tech was created to help advertisers save money and create a better user experience, but the market grew too fast for publishers to manage. That led to regulatory fallout (like the General Data Protection Regulation (GDPR) in Europe), the rise of ad blockers, and publisher/advertiser backlash. Also, once media shifted to the smartphone, many ad tech companies that were cookies and targeting-based (works well on desktop, not on mobile) were left in the dust.
Data: Money.Net; Chart: Chris Canipe / Axios
Last week, Sizmek announced plans to acquire Rocket Fuel, for $125.5 million and there are reports that a merger between Taboola and Outbrain is in advanced stages. Earlier this year, Terry Kawaja, founder and CEO of media and technology firm LUMA Partners, said consolidation in the ad tech space will cause 90% of the companies disappear.
Go deeper: Most of this consolidation is occurring in the ad targeting and distribution space. We're now seeing a whole new wave of ad tech companies popping up that specialize in new digital formats, like augmented reality, artificial intelligence and measurement. These companies will inevitably go through the same rise and fall driven by consumption habits. There's always the next best thing!