Ad tech deals soar on upbeat forecasts
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Ad tech, marketing tech and digital content deals are surging to the highest point since the first half of 2022, shortly after the 2021 advertising boom.
Why it matters: The recent M&A uptick stems from a comeback in digital ad spend and increased attention on the companies supporting these media channels to simplify the market.
Driving the news: Video platform Brightcove agreed to be acquired by Italian tech company Bending Spoons for $233 million, they announced on Monday.
- The take-private deal is the latest in a flurry of deal flow in the media sector.
- Brightcove, which hosts and monetizes videos, has been publicly traded since 2012. Like most ad and martech companies, its valuation skyrocketed in 2021 but then struggled amid an ad market slowdown.
Zoom in: M&A activity across ad tech, martech and digital content was up 13% in Q3 of 2024 compared to the prior quarter and up 20% compared to Q3 of 2023, per data from Luma Partners. For ad tech, specifically, M&A volume was up 118% year-over-year and up 26% quarter-over-quarter.
- Notable Q3 deals included Equativ-Kamino Retail, Outbrain-Teads, Publicis-Influential, Optimizely-Netspring and Ziff Davis-CNET.
- Deal flow has continued to heat up in Q4 with Zeta-LiveIntent, Mediaocean-Innovid, Connatix-JW Player and Samba TV-Semasio.
Zoom out: Strategic activity has been notable with companies seeking out potential acquisitions rather than sellers running broad processes, says John Lambros, co-head of the U.S. Technology Group and head of digital media and entertainment at Houlihan Lokey, which advised LiveIntent on its sale.
- "Companies want to sharpen their toolset for going after specific segments of the audience with either better data, AI-enhanced features, bringing the tools in-house so they don't have to rely on third parties," Lambros says. "We're through the worst of the recession and advertisers need to get out there and need to drive more customers."
- Recent deals have strengthened ad tech firm's work in growing channels like connected TV and retail media. The demand for first-party data has also motivated deals.
- "It's an inflection point for ad tech," says Jeff Goldstein, co-head of the Americas Media & Entertainment practice at AlixPartners. "Connected TV and other premium digital advertising is a much bigger part of overall total digital advertising than it was a couple of years ago."
What we're watching: Goldstein says private equity firms who backed the media industry during the downturn in ad spend will be looking for potential deals to bolster growth or find an exit.
- Buyers have eyed Integral Ad Science for a take-private deal, per recent reports. Criteo also has long been viewed as a potential target.
