2019: The Year of Ad-Tech Darwinism

As 2019—and the decade—draw to a close, the media industry has witnessed a host of closures, fire sales and a rapidly accelerating number of mergers in ad tech.

Many have dubbed this as the end of the golden era of ad tech, or the ad network, and the beginning of a more Darwinist era where only the strongest in the sector will survive.

This week alone saw the announcement of the intended merger of Rubicon Project and Telaria, just days after it was reported that Smart AdServer has bought LiquidM, plus the collapse of performance video advertising outfit Eyeview.

Notable 2019 ad tech M&A deals

These developments come the same year as Sizmek, an independent player whose full-service ad stack was positioned as an alternative to Google’s, filed for Chapter 11 protection then had its parts later sold off to Amazon, Peer39 and Zeta Global. This was followed by IgnitionOne likewise winding up its operations.

Such occurrences further exacerbate hardship in the sector, as many companies owed money by outfits in financial dire straits are left with unfulfilled invoices, some to the tune of millions of dollars.

And this is just one indication of the tough terrain that is contemporary ad tech, with independent ad-tech companies facing a myriad hardships. Most notable among them is the rising tide of data privacy regulation across the globe—as exemplified by the California Consumer Privacy Act and the EU’s General Data Privacy Regulations—that’s forcing advertisers to consolidate their online ad spend in the industry’s walled gardens.

As a result, many early stage ad-tech investors have grown impatient and are increasingly willing to cut their losses by forcing a sale, which simply means the end of the road for many.

Lack of interest from strategic buyers

One source, who requested anonymity given the nature of their work, told Adweek that the number of mergers among larger media owners, such as the union of CBS and Viacom, has left such players unable to devote the necessary due diligence to buy ad tech.

Simultaneously, many legacy media owners seem to be cooling on ad tech, as many of the assets bought in the 2014-to-2017 era are back on the market.

For example, Comcast was rumored to be have been in negotiations with Dataxu, the demand-side platform that later sold to Roku for $150 million. Many believe this was an unsatisfactory exit, but the two were far apart on valuation.

Additionally, pan-European broadcaster RTL has said it is looking for a buyer for SpotX, with Altice likewise searching for a buyer for Teads, and News Corp. fielding offers for Unruly.

Similarly, the agency holding groups appear to be divesting their programmatic investments acquired during the same era, with many preferring to channel their efforts—and funds—into solving the identity challenge they face with the purchase of first-party data assets.

For instance, this year saw WPP sell off Triad Retail Media, an asset it bought in 2016 and housed within its agency trading desk Xaxis, as it seeks to turn around its GroupM unit.

This leaves the challengers to the industry’s holding groups, such as Accenture Interactive, S4 Capital and JellyFish as potential acquirers of ad tech. Although, these companies are very selective as to which digital assets they will write a check for.

The need to scale 

Terry Kawaja, CEO of Luma Partners, the investment bank that advised Rubicon on its merger with Telaria, told Adweek the intended deal was a union of survivors, both of whom were aware of the need for scale.

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