The Ad Tech Industry is Consolidating. Here's Why.

 

In the last two years, large acquisitions inside the ad tech industry have resulted in a consolidated market — a healthy sign of maturity, estimated to top all other marketing channels in 2016. Of the more recent acquisitions, Yahoo bought BrightRoll for $640 million; Rubicon Project acquired Chango for $122 million; and AppNexus gobbled up Yieldex for $100 million. This should paint the picture pretty clear: the massive opportunity in online, programmatic and mobile advertising is tomorrow’s marketing landscape. As for today, it’s a good time to be a small ad tech company, many of which are developing the technologies that will take the ad tech industry to the next level.  

It was only a few years ago that marketers scoffed at mobile spending. As brands and advertisers have slowly warmed up to the medium, there has been a wide increase in the demand for services. As the need for these services increased, the technologies themselves got better — formatting, scalability and advanced metric systems all developed into robust analytics tools that allowed for greater control and targeting. With so much demand, the market has become saturated with small tech companies left to battle over small niche markets and consumer segments. 

But in a world with behemoth players like Google, Yahoo and Facebook, it’s not always a safe place to exist. Rather than spend time and resources on R&D, the big boys have found it’s much easier to purchases these small companies. It’s up to the little guys to get noticed or get out of the way.  

The good news for mobile marketers is this slow consolidation will make advertising more standardized, as well as improve quality of both online and mobile. The bad news is low competition will likely drive up prices.  

The trend among the acquisitions so far has centered on scalability, or a company’s ability to provide scalable ad formats, analytics and insight. Most of the acquired companies also have a presence in both the supply side and demand side of ad integration. Many successful ad tech companies provide a solution to a unique problem or tap into a specific customer segment. 

There’s definitely room for the little guys as consolidation of the ad tech industry continues, but it’s going to depend greatly on a company’s ability to provide services that meet the above criteria at a minimum. However, as the industry grows, there will likely be room for new improvements as user behavior changes in response to increased mobile advertising.