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- Companies that claim to help advertisers take advantage of the shift of TV ad dollars online and new privacy laws could be attractive acquisition targets this year.
- Business Insider asked bankers, analysts, and consultants which companies are likely buyers of such adtech companies this year.
- Their choices show how big companies like Walmart and LiveRamp could be betting on acquisitions to build businesses that compete with Google and Amazon and circumvent new limits on collecting consumer data.
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Even as the coronavirus rocks financial markets, 2020 could be a busy for adtech dealmaking.
Business Insider recently reported on companies that are attractive acquisition targets this year, including GumGum and iSpot.TV. Driving the potential deals are changes to the TV ad business, the death of third-party cookies, and laws like California's Consumer Privacy Act that are changing how marketers collect consumer data.
Separately, we asked bankers, consultants, and analysts to identify companies that are most likely to be buyers of adtech companies this year. To be clear, these people did not suggest that any of the companies they named are currently in any deal talks.
Industry-watchers said the main buyers of adtech would fall into two groups: Big companies looking to compete with tech giants like Google and Amazon; and companies trying to move into new areas like over-the-top advertising.
"The adtech world is littered with folks who aren't profitable and have never been profitable," said Jay McDonald, CEO of investment firm Digital Capital Advisors. "Buyers have gotten smarter as time marches on — they want real businesses that have scaled revenue and are profitable."
Here are six companies to watch this year, in alphabetical order.
Potential acquisition: A TV measurement firm
Private equity firm Bain Capital acquired 60% of market research firm Kantar from holding company WPP last year, valuing Kantar at $4 billion. Elgin Thompson, managing director of technology investment banking at JMP Securities, said Bain Capital could next look to acquire a TV-minded measurement firm this year to build its portfolio and compete with legacy measurement firms Comscore and Nielsen.
"Bain is going to be particularly active in rolling up that category," he said. "All attention is being paid towards OTT because of the promise that the medium holds."
As ad dollars flow from linear TV to over-the-top advertising, companies are trying to measure TV ads like text-based digital ads, where advertisers can see how long ads are viewed.
Potential acquisition: An identity company
Since spinning off Acxiom to Interpublic Group in 2018, LiveRamp has doubled down on becoming a neutral, independent player that helps marketers navigate new privacy laws.
LiveRamp helps consumer-packaged-good brands and automakers crunch data for ad targeting and has tried to expand its business to publishers. The firm is among companies like LiveIntent, Merkle, and ID5 that pitch marketers identity-graph products to replace third-party cookies and has been buying up companies to string together data to create identities, or profiles, of consumers.
In 2019, LiveRamp acquired Dutch consent-management firm Faktor and TV measurement and data firm Data Plus Math, and Ratko Vidakovic, founder and principal at ad-tech consulting firm AdProfs, said LiveRamp could do more identity-focused deals this year.
"It sits on over $700 million in cash and made two strategic acquisitions last year — I expect to see more acquisitions from them this year," he said.
The Trade Desk
Potential acquisitions: A contextual advertising firm or an ad server
The Trade Desk is the largest adtech company outside of giants like Google and Amazon, and several sources said it may make an acquisition this year to keep ahead of its competition.
The Trade Desk is not known as a big buyer of adtech. It acquired AdBrain, a firm that helps advertisers stitch together cross-device IDs, and it was one of the last bidders of Sizmek's contextual targeting company Peer39 last year.
As the ad industry phases out third-party cookies that have long been used to target ads at people, The Trade Desk could buy a contextual advertising firm to diversify its revenue or an ad server to compete with Google's dominant ad server that advertisers use to run display and mobile ads.
The Trade Desk is also seen as an acquisition target of a tech giant like Google, Amazon, or Facebook.
Potential acquisition: TV tech firms
Smart TV manufacturer Vizio wants to sell more connected-TV ads. In December, the company formed a unit called Vizio Ads to sell ad space within WatchFree, its ad-supported service, and the SmartCast platform.
The TV-tech space is heating up as more marketers move money from linear TV to streaming TV, and Vizio may look for adtech acquisitions to build out its platform, said Digital Capital Advisors' McDonald.
"They're not going to become tech-heavy, but they need tech enablement, whether that's an ad server or a DSP," he said.
Potential acquisition: A demand-side platform
Walmart Media Group, the retailer's in-house advertising group, is trying to build an advertising business to compete with Amazon's.
After splitting from longtime advertising partner Triad Retail Media last year, Walmart has been building its own ad operation, hiring top leadership and creating a self-serve platform that lets third parties sell ad inventory through software.
To serve its advertising goals, Walmart could look to acquire a small demand-side platform (or DSP) like Beeswax, StackAdapt or Adelphic that help advertisers buy automated advertising, said Chris Kane, founder and president of adtech consultancy Jounce Media.
Amazon also runs a demand-side platform that is becoming one of the biggest competitors to Google and The Trade Desk with agencies and large marketers. Smaller DSPs like Beeswax, StackAdapt and Adelphic are focused on smaller advertisers.
Kane said a smaller DSP would be attractive to Walmart because brands are trying to work with fewer DSPs.
"There's no marketer who knows what they're doing who will have 30 DSPs," he said. "It feels like the marketers are going to accelerate this consolidation."
Potential acquisition: Niche adtech companies
Zeta Global pitches marketing cloud technology that helps brands organize and manage data using artificial intelligence. It's been buying up adtech companies at rock-bottom prices to build up its adtech, and source said they expected the firm to continue on that path this year.
The deals it's already done suggest Zeta could be interested in small companies that are sold at prices that are a sliver of the acquirer's funding or onetime valuations. Last year, Zeta Global acquired a demand-side platform from bankrupt adtech firm Sizmek, parts of IgnitionOne's business, and location-based firm PlaceIQ's ad business.
JMP Securities' Thompson said he expected that acquisition approach to continue this year.
"Zeta has done a remarkable job of scaling and stitching together super-interesting assets in a way that is not betting the farm but is credible in terms of integration and execution," he said.