Advertising
- Some marketers see an opportunity for new ad-tech deals in the wake of AT&T's purchase of AppNexus.
- Experts say companies that focus on the buy-side of the industry like The Trade Desk, MediaMath, and DataXu are possible acquisition targets.
- DataXu's chief revenue officer Ed Montes declined to comment on acquisition rumors but said the company's business from technology that plugs into connected TV and over-the-top "is exploding."
- "I am not surprised to see us associated with rumors resulting from the AT&T and AppNexus transaction," he added.
- Comcast and Disney are two companies that could benefit from ad-tech acquisitions, they say.
AT&T's acquisition of AppNexus will open up loads of new web inventory and technology pipes to power the telecom's aggressive ambition to challenge not only the duopoly of Facebook and Google but also rival TV networks for ad budgets.
And according to industry experts, we can expect to see similar ad-tech deals in the coming months - although it will be hard to top the size of AppNexus.
AppNexus is rumored to have cost AT&T around $1.6 billion, making it one of the largest ad-tech acquisitions in recent years. To put that amount in comparison, Adobe acquired video
Part of the appeal of AppNexus is that the company's business spans both sides of the industry: Its supply-side platform helps publishers make money from ad placements in their content and a demand-side platform lets brands and their agencies purchase inventory.
In the past year, AppNexus has begun to ramp up its programmatic offerings for buying connected TV inventory, which AT&T likely views as a lucrative addition to its premium content from Turner and HBO.
AT&T declined to make an executive available for an interview and AppNexus did not reply to press enquiries.
"I think that Brian Lesser is someone who fundamentally understands this world-he basically bought himself instant access to an ecosystem," said Joanna O'Connell, vice president and analyst at Forrester Research. "AppNexus will give AT&T a lot of the requisite and scaled technology to play in the big digital channel."
After a few quiet years of ad-tech acquisitions and rough markets for public companies, some industry experts said to expect more acquisitions.
"I think we'll see a wave of consolidation next among the mid- and niche players banding together for survival and hoping to be acquired by other strategics," said Ana Milicevic, principal and cofounder of Sparrow Advisers, a management consultancy focused on ad tech and marketing tech. "So less of direct acquisitions, more mergers between companies that are seemingly at a similar [and] equal stage."
Forrester's O'Connell added that there are a limited number of big, splashy companies looking to acquire ad-tech firms, "but there some very big companies out there that can conceivably make a move into this space."
Here's a look at three potential acquisitions that ad execs are buzzing about.
Comcast and Disney are hungry for ad-tech but already have content
Two industry sources named MediaMath and DataXu as possible acquisition targets for another telecom company or possibly even Facebook as a way to beef up programmatic resources. Unlike AppNexus, both companies specializes in the buy side of advertising with demand-side platforms that agencies and brands can use to buy ads in real-time.
"They would have been a lot cheaper, I believe," said Jay Friedman, chief operating officer at Goodway Group, about MediaMath. According to Friedman, MediaMath's focus on trade desks and agencies would be a good fit for a company like Comcast, which already has a boatload of premium content and is angling for more through an acquisition of 21st Century Fox.
It also makes sense for Disney, which is a bidding war with Comcast for 21st Century Fox, added Milicevic.
"The other obvious candidate [for MediaMath] would be a telco with an international presence and holdings who have not yet made an acquisition in this space like Telefonica, T-Mobile [or] Softbank," she said.
Or, "if Facebook were more open to later-stage acquisitions, it would be a great fit there."
DataXu's chief revenue officer Ed Montes declined to comment on acquisition rumors but said, "We believe we continue to build great technology including our unique approach to identity management." Specifically, he said the company's business from technology that plugs into connected TV and over-the-top "is exploding and I am not surprised to see us associated with rumors resulting from the AT&T and AppNexus transaction."
MediaMath did not respond to messages seeking comment.
Expect similar acquisitions, but not immediately
The past few years have been rough for ad-tech companies that once bet big on going public, but The Trade Desk's earnings have consistently been strong since listing in September 2016. Analysts recently warned that the company's revenue growth may slow, but that there's still potential with programmatic advertising in international markets, mobile inventory and connected TV inventory.
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"They're not off the table just because they're public," Goodway Group's Friedman said, of the potential for an acquisition. "If [AT&T] spends $85 billion on Time Warner, what's another billion?"
He added that he doesn't expect to see a string of immediate similar acquisitions-at least not in the next couple of months.
"I would never bet that a single data point represents a trend," he added. "But T-Mobile, Sprint and Comcast have to determine what their strategy is. This doesn't scream to me that we're going to see two or three big deals in the next 60 days-I believe that it's going to take longer to play out because these are big, business-pivoting decisions."
The Trade Desk did not respond to messages seeking comment.
In the cases of The Trade Desk, DataXu, and MediaMath, the companies do not have content or direct access to inventory on publishers' websites-one of the key parts of AT&T's pitch to marketers.
"The business of content delivery may be changing," said Mac Delaney, senior vice president of media investment and innovation at Merkle. "If you think of Comcast [or] Verizon, does your core business have to be owning the tech and the audience?"