This article was originally published Dec. 10
Adtech M&A has started to pick up the pace in the last few weeks.
Third-quarter deal volume was up 118% year-over-year and up 26% quarter over quarter, according to data from Luma Partners, Axios reports. That’s the highest rate since the first half of 2022.
Driving the deal growth is an increase in digital ad spending—recent earnings from some public adtech firms like The Trade Desk and tech giants like Google have been strong—plus a sense of “cautious optimism” going into 2024 after a couple of tough years, said Bill Wise, CEO of Mediaocean.
Sure, there have been many deals in 2024, but most of these were rational, consolidation transactions characterized as opportunistic deals at reasonable or low valuations.
But what has picked up the pace lately are the number of more strategic deals. These deals focus on where the future of digital advertising is heading and can lead to stronger valuation multiples, said Conor McKenna, partner at investment firm Luma. In other words, strategic deals signify a healthy market.
McKenna expects there’s more of this to come in 2025. “These will focus around key themes such as CTV and commerce media, and critical capabilities tied to the optimization of performance, addressability, creative, and measurement,” said McKenna.
Another force tying these deals together is the push for scale, more robust omnichannel capabilities—especially in video—and a trend towards optimizing bottom-funnel conversions that deliver more precise ad spend ROI, said Mark Wright, chief of M&A advisory practice at Prohaska Consulting.
“As this acceleration happens, the industry could very well see a frenzied game of musical chairs as more and more players enter the M&A game fearful they will be left standing alone when the music stops,” said Wright. “Our industry is growing up.”
ADWEEK compiled a list of significant M&A deals this year and what they tell us about the state of the industry.
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Cast your mind back to January, when the weeks felt long, and the year’s infinite possibilities stretched ahead. Those possibilities would have felt very bright for LiveRamp, which snapped up Habu, combining two titans in the data clean room world.
