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State of the Screens

What’s Driving AdTech Valuations?

By July 8, 2021No Comments

The Gartner Hype Cycle of Ad Tech Graph

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

Tech Multiples Expanded Significantly - Traditionally Largely Flat Graph

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

Potential Strategic Interests in CTV Graph

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%)

Digital Ad Spending Worldwide 2019-2024

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%

Targeted Video Ad Market is 130B by 2024 Graph

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

Percent of Marketing Budget on Marketing Technology Graph

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

Anticipated Change in Martech Investment Over Next 12 Months Diagram

Video #1: Q2 2021 Market Report

Q2 2021 Market Report Thumbnail

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

AdTechn Companies See Strong Valuations Amid M&A Activity - Mediaocean's Bill Wise Video Thumbnail

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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