Television companies also present a new strategic exit opportunity.
Broadcasters and tech or telco players with their sights set on Hollywood have consolidated the DSP and analytics category this year, he said. Amazon made its first ad tech deal this year when it bought the Sizmek ad server out of bankruptcy, and in the past couple of weeks (just outside the Q1-Q3 period covered by the Results International report) Roku and AT&T’s Xandr purchased the video DSPs dataxu and Clypd, respectively.
Competition from global media titans is making life difficult for DSP startups. Taptica, which acquired Tremor Video’s DSP in 2017, merged with RhythmOne this year. And the marketing cloud Zeta Global is buying and bartering its way to DSP market share, with deals for the Sizmek DSP and the DSP businesses of IgnitionOne and PlaceIQ.
Content recommendation, multitouch attribution and DMPs are other ad tech buckets that have “gone from full to having one or two companies left” in the past couple of years, Georges-Picot said.
The rebound in ad tech deals this year isn’t necessarily a good omen for the industry. Premiums tend to come down after the first one or two deals in a tech vendor category, which he said has been true for DSPs and ad measurement tech.
Some startups and M&A advisors are also trying to seize on the recent growth of public companies such as The Trade Desk, Roku or Rubicon Project, but that momentum-based M&A can backfire painfully, Georges-Picot said.
“Public valuations do inform private valuations, so some people are going to see this as the time to go to market,” he said. “But it’s a dangerous game, because when those valuations go down it’ll be even worse for companies trying to claim the same multiples.”