What’s Driving AdTech Valuations?

Big news: It is a great time to be in ad tech as company valuations soar in public and private markets.

Publicly traded ad tech companies with $1B+ valuation according to Luma Partners:
1) 2017 – 1
2) 2021 – 12
3) 2022P- 24+

Quote from Terence Kawaja – Founder and CEO @ Luma Partners:“We are now at an inflection point. We predict that the next 18 months will see the greatest surge in M&A transactions the sector has ever seen.”

Ad tech multiples for publicly traded companies:
1) Jan-20 – 6.4X
2) Dec-20 – 20.7X

Big question #1: Which groups are potential acquirers in the convergent TV space?

Active acquirers include:
1) Private equity
2) Digital buying platforms
3) TV buying platforms
4) Media companies
5) Local broadcast/cable companies
6) Data companies
7) Marketing clouds
8) Smart TV manufacturers

Big question #2: Why are both the public and private markets for ad tech so hot right now?

Quick answer: A surging global digital ad market along with a greater share of marketers’ budget allocated to marketing technology.

Global digital ad spend (YoY growth) according to eMarketer:
1) 2019 – $336B (↑ 19%)
2) 2020 – $378B (↑ 13%)
3) 2021P – $455B (↑ 20%)
4) 2022P – $524B (↑ 15%)
5) 2023P – $586B (↑ 12%)
6) 2024P – $646B (↑ 10%)

FYI: Targeted video advertising is one of the fastest-growing subsets of this market.

Compounded annual growth rate (CAGR) between 2018-24:
1) Targeted video – ↑ 29%
2) Digital video – ↑ 23%
3) Digital (all types) – ↑ 14%

Share of overall marketing budget spent on marketing technology according to BDO:
1) 2017 – 14%
2) 2018 – 24%
3) 2019 – 30%

YoY change in marketing technology investment by marketer size according to Nielsen:
1) Small – ↑ 31%
2) Medium -↑ 25%
3) Large -↑ 46%

Video #1: Q2 2021 Market Report

Video #2: Adtech Companies See Strong Valuations Amid M&A Activity: Mediaocean’s Bill Wise

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