A History of Ad Tech Acquisitions

Outside of the network business though, there were a huge number of influential acquisitions around “pure” tech.  Very quickly, all the major dynamic creative optimizers were snatched up; for example, Google bought Teracent (2009), Yahoo! bought Dappr (2010), AOL bought Pictela (2010), InMobi bought Sprout (2011), ValueClick bought Dotomi (2011), and Collective bought Tumri (2011).  In just two years, the entire DCO industry was consolidated!

There were also major acquisitions around the Analytics space – Adobe bought Omniture (2009), and just a year later IBM took out the major independent left at the time, CoreMetrics (2010).  We also started to see hints of what was to come in the years ahead; Microsoft bought AdECN, a V1.0 ad exchange (2007), AOL bought social network Bebo (2008), which turned out disastrously but was the first social network exit since the ill-fated News Corp / MySpace transaction in 2005.  Equifax bought financial data aggregator IXI (2009), Opera bought mobile ad server AdMarvel (2010), Operative bought their primary competitor, Solbright (2010), to consolidate the publisher order management sector and compete with DoubleClick’s Sales Manager product, and Better Advertising bought Ghostery (2010), which ended up playing a major role in the consumer privacy / data targeting debate for such a small company.

The most influential acquisitions during this time however were Google’s purchase of Invite Media (2010), an early DSP they turned into DoubleClick Bid Manager, Adobe’s purchase of Demdex, an early DMP (2011), and Google’s purchase of Admeld (2011), an early SSP, which closed the book on this chapter in ad tech in my opinion.  Google had succeeded in building the first end-to-end programmatic solution. This was an interesting time in ad tech, not only because of all the innovation, but in looking at the acquisition activity, it signaled the entrance of major players in the space.  Apple, Adobe, and Salesforce, who bought Radian6, a social analytics tool (2011) all got into the ad tech business during these years, though it wasn’t clear how committed they were.

The Programmatic Era (2011 – 2015)

With the Invite Media and AdMeld acquisition, it felt like something had changed in the ad tech industry – those transactions validated the concept of programmatic media as the future of the industry, and told the market that Google was putting a major bet on real-time-bidding as the wave of the future.  Since then, it’s been an all out acquisition-fest in ad tech, with global conglomerates and industry specialists using cheap capital to fuel a landgrab for ad tech in social, mobile, video, and data to solidify their position in the new programmatic order.  While Adobe, Salesforce, and Apple introduced some real competition to Google’s leadership in the previous era, Facebook & Twitter have had a major influence on the current era.

On the social front, it’s been disarming to see someone other than Google lead, but that’s exactly what’s happened.  Adobe bought Efficient Frontier (2011), Salesforce bought Buddy Media (2012), Facebook bought Instagram (2011) and Whatsapp (2014) for a staggering amount of money, Twitter bought Vine (2012) and Periscope (2015), and Yahoo! bought Tumblr (2013).  The last key acquisition I want to highlight though was for a very small company, but one that may prove to be the first shot across the bow for social eCommerce; I’m talking about Pinterest’s quiet acquisition of ad tech firm Kosei (2015), a recommendation technology that may prove to be the Applied Semantics of social connections.

Mobile is growing like a weed, too, despite major assets being off the table thanks to Google and Apple in the previous era.  Some of the major and notable transactions were SingTel’s acquisition of Amobee (2012), Videology’s purchase of mobile match provider Collider (2012), Criteo’s acquisition of app download tracker Ad-X (2013), Millennial’s purchase of rival Jumptap (2013), Twitter’s acquisition of TapCommerce (2014), Millennial’s purchase of Nexage (2014), the leading mobile ad exchange, and Under Armor’s $475 million bet on MapMyFitness (2015).  A sure trend in the market in the programmatic era is the blurring of lines – in prior years platforms seemed to specialize in specific channels, like mobile or video, but in many cases today we’re seeing channel agnostic solutions, or companies buying their way into new capabilities.  The Under Armor acquisition is a major event in my opinion, because it is one of the first big investments we’ve seen from a brand in what is essentially an earned media platform, except this one lets them own the data, unlike the popular social platforms.  It’s pretty uncommon to see marketers as the path to exit for ad tech – will that change in the future?

In the first part of the programmatic era, there was a surge of interest in data companies – those that collected it, analyzed it, and made it targetable.  NeuStar bought data aggregator TargusInfo (2011) for a huge $650 million, iCrossing (part of Hearst) bought the DMP RedAril (2011), DG bought semantic tech Peer39 (2012), Merkle bought Brilig (2012), YuMe bought Crowd Science (2013), IHS bought auto data provider Polk (2013), Google bought Waze (2013), Tower Data bought match partner Rapleaf, Neustar bought Aggregate Knowledge (2013), Xaxis bought Crystal Semantics (2013), Lotame bought mobile DMP Admobius (2014), and comScore bought Proximic (2015).  Those were all important deals but the major player was Oracle, who scooped up leading DMP BlueKai (2014), and leading data aggregator DataLogix (2014), announcing themselves as the next outsider conglomerate to plant a flag in ad tech.  Perhaps the most interesting deal on the data side though was LinkedIn’s acquisition of Bizo (2014), which it’s used to build a kind of private ad network built on its own data.

But the hot sector right now though is undoubtedly video – when Google bought YouTube in 2006 it seemed to suck the air out of the room, but there have been many exits since 2011.  Collective bought Oggifinogi (2011), Adobe bought video DSP Auditude (2011), AOL bought Adap.tv (2013) – one of their smartest purchases ever – Rakuten bought Viki (2013), a Hulu-like site wildly popular in Asia, Comcast bought the FreeWheel (2014), the DoubleClick of video, Facebook bought LiveRail (2014), Yahoo! bought Brightroll (2014), Amazon bought Twitch (2014), Disney bought Maker Studios (2014), and Vivendi bought DailyMotion (2015).  That’s a long list of major transactions, to say nothing of the much longer list of smaller acquisitions in the video analytics and connected TV space.

The Consolidation Era (post 2015)

In 2015 / 2016, the consolidation everyone has been talking about for years seems to be starting.  There are fewer suitors, fewer ad tech startups, and more exits of quality assets than years prior.  Right now, there’s a trend to acquire quality publishers, and publishers with data assets as Facebook continues to capture more and more media dollars.

digital publisher acquisitions graph

Look at huge transactions like Expedia buying HomeAway (2015), a vacation rental portal that has tons of travel intent data, IBM’s purchase of the Weather Company’s digital assets (2015) or Microsoft’s mammoth purchase of professional social network LinkedIn (2016).  This year, you can see the data trend playing out with Ziff Davis’s purchase of Everyday Health (2016), Ranstand’s purchase of Monster (2016).  These are examples of companies with huge reach buying data they can use to increase the value of the inventory they already have.  But you also see the reverse, where companies with powerful data assets are buying their way into scale and reach.  Verizon’s interest in Yahoo! (announced 2016, still pending) certainly qualifies here, as does the AT&T / TimeWarner merger (announced 2016, still pending).  Finally, there’s simply some consolidation of power playing out among big companies.  The Nexstar / Media General / Meredith saga (2016) is a good example, as is the Corus / Shaw transaction (2016); both were multi-billion dollar transactions that received scant coverage in the digital space.

The last trend to highlight are the white knights from Asia in funding some of the major exits of last year, all in the mobile space.  There were four nine-figure-plus deals from Asian suitors in the last year alone; Orient Hontai Capital’s purchase AppLovin (2016) for $1.4 billion, Miteno Communications purchase of Media.net (2016) for $900 million, and Spearhead Integrated Marketing Communications Group’s buy of Smaato (2016) for $148 million, not to mention Golden Silk Road’s acquisition of Opera for $1.2 billion (2016).

What’s Next?

In my mind there are a few near term horizons for ad technology – unfortunately the first is probably going to be pretty ugly.  While we’ve largely passed the startup / adoption phase of the Programmatic Era, we’re entering the gilded yet dangerous time of consolidation, of big technology companies buying smaller technology companies to build out their vision of a “full stack solution” for advertisers or publishers, whatever they believe that to mean.  As buyers pick their partners though, there’s not going to be a happy exit for everyone.  Cheap money and a solid economy will not last forever and when one of those forces shifts, there are likely to be some companies which just shutter their doors, or accept painful exits, similar to the tough deals we’ve seen with companies like Triggit or Maxifier (both 2015) or even Monster (2016).  Unfortunately I think we could see the end of the programmatic era closed by a major player going bankrupt or being abandoned by its senior team due to difficult market conditions.  Yahoo! anyone?

After that pain, the next era is surely to be the global & connected TV era.  The major players in ad tech have built a system that works in the North America, Australia / NZ, and Western Europe, but getting the model to work in Latin America, Africa, and Asia in particularly is going to require some serious localization, international ad network acquisitions, and partner acquisitions that will probably be less about technology and more about buying account relationships and talent on the ground in those markets.  Companies are already making moves on connected TV (see Comcast’s 2015 acquisition of Visible World, or Adap.tv’s 2014 acquisition of Precision Demand), however TV will be a more difficult market to crack from my perspective because the publishers still hold all the power as there is no fragmented network of bloggers out there creating cheap content that can compete.

Time will tell!  Until then you’ll just have to watch the ad tech acquisition tracker and analyze the results for yourself; remember, I’ll be keeping it up to date each week going forward.

2 comments

  1. Ben,

    This is an amazing Ad Tech tutorial and data set – Kudos!

    I want to ask if you have specific thoughts about the future (say 1-Year and 5-Year) for Criteo?

    I am a finance guy doing research on re-targeting for upcoming job interviews, and I am positively amazed at how Criteo stands out in terms of its “Returns on Capital”. The financials seem to point to the best engineered technology in all of Ad Tech – and this may seem surprising but the only comparable return profile / growth rate combination I can find is Google from 2004 – 2008 (granted at the time Google was 10x the size).

    BUT, the moves by major publishers to build walled gardens has a lot of people questioning how a pure-play re-targeting company can survive independently.

    Many Thanks Ben (And I Swear I turned Off my Ad Blocker on your site!!!).

    Daniel Moisio

  2. Thanks Daniel!

    I would agree with you that Criteo seems to have very good technology. While I don’t have direct experience working with them as a customer, I have only heard good things and as an ad ops person, I can see how they deploy true real-time segmentation and dynamic creative optimization in a powerful manner. I’ve also seen them lead on things like first look integrations, which paved the way for header bidding.

    I think Criteo is in really good shape for the next year – at least as much as the advertising market is – because they’ve done the hard work over years to build a huge network of high quality supply, to which they have preferential access because they pay high rates due to the low funnel / shopping cart abandonment campaigns they run and spend a lot of money. Over the longer haul, I’d still wager Criteo is well positioned because buyers are moving in their direction. More media is transacting in a programmatic channel, and Criteo benefits from that. Even in a walled garden setup, I think it will be difficult for Google / Facebook to walk away from the demand Criteo brings to the table; they have network benefits at this point. The first big overhangs I see is in video, where folks like Google are trying to force buyers to access Youtube via DBM. Platforms like Criteo could get cut out of strategic supply in that sense, but then the second threat is ad blocking. Like any ad tech platform, Criteo works on a cookie-based infrastructure, and if that breaks down they’ll have to make some major investments in an alternative approach. Since the whole industry is at risk there however, I don’t see a unique risk for Criteo.

    Hope that helps!
    Ben

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