Follow the money

Cookies are disappearing, CTV is growing and a new crop of ad tech companies are cashing in on the change.

From PE investment to IPOs, SPAC offerings to VC deals, ad tech is having a moment.

The sector, which had largely been written off by investors about 5 years ago, is regaining momentum as a number of market forces reshape the landscape, from regulatory scrutiny, to consumer media shifts, to technical changes that will upend third-party data tracking.

As a result, ad tech companies designed with privacy in mind and those that are chasing the shift to streaming are attracting investment, while those that rely on cookies search for a new future.

On Tuesday, data company InfoSum, which helps brands match online and offline datasets for ad targeting without actually moving that data off of their servers, raised $65 million. InfoSum, which already works with Disney, Omnicom, Merkle and AT&T, is preparing for an IPO and global expansion within the next five years as marketers seek privacy-compliant ways to do targeted advertising.

Similarly GumGum, which helps advertisers target ads based on page context and does not rely on cookies, raised $75 million in April as advertisers prepare for a cookieless future.  And marketing cloud Zeta global went public at a $2.3 billion valuation in June.

It’s a sign of privacy’s elevated role in the ecosphere, as marketers beef up their owned assets and move away from cookies and third-party data.

Connected TV (CTV) is another area to watch. It’s no secret that streaming consumption skyrocketed during the pandemic, and advertisers’ dollars are following suit. More than 40% of upfront commitments to Disney went toward its streaming portfolio, while NBCUniversal’s Peacock landed $500 million in upfront commitments this year. According to eMarketer, CTV ad spending in the US will surpass $18 billion by 2024.

This massive shift of a $70 billion industry is trickling down to reshape the ad tech landscape.

In July, programmatic exchange Magnite acquired CTV ad server SpringServe for $31 million, after buying CTV exchange SpotX the year prior. Just last week, Integral Ad Science bought CTV ad platform Publica for $220 million to expand its verification services to the medium as it grows, shortly after going public in June at an $11 billion valuation.

Programmatic platform Simpli.fi landed a new investment round from Blackstone at a $1.5 billion valuation as it shifts its focus from display to CTV, and Innovid, an ad tech company that has long played in the CTV space, went public through a SPAC deal in June. Demand-side platform AcuityAds also went public at a $600 million valuation in June with a focus on capturing CTV dollars in the US.

CTV excitement is spurring investment in the agency world as well; digital agency Tinuiti acquired CTV ad buying firm Bliss Point Media in July. And agency billing software giant Mediaocean bought dynamic ad server Flashtalking for $500 million in July in an effort to modernize its offering as TV shifts over the top.

For ad tech, CTV is more than just an opportunity to capture a sliver of a changing market. It’s also a buffer as third-party cookies phase out (CTV inherently doesn’t rely on cookies).

And let’s not forget about e-commerce, which is shaking up the agency landscape as much as ad tech. Taboola’s $800 million acquisition of Connexity and Criteo’s rapid shift to retail media are two data points against this unstoppable consumer shift.

As ad tech evolves its focus, consolidation is happening fast — legacy companies are adapting and businesses are seeking scale to survive. Verve Group’s acquisition of mobile ad exchange Smaato is a good example.

Many of these ad tech companies will be able to capture the opportunity in front of them. But I predict that even more will become artifacts on an outdated version of the Lumascape as the sprawling ad tech sector evolves and goes through a long-awaited consolidation.

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