Digital Video and Mobile AdTech in the M & A Crosshairs 2005 – 2016: $17.5 Billion in Deals and Counting

  • ID: 3947596
  • Report
  • 95 pages
  • AccuStream iMedia Research
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FEATURED COMPANIES

  • AOL
  • AT&T
  • DoubleClick
  • Google
  • Sizmek
  • Time, Inc.
  • MORE

A comprehensive M & A analysis conducted recently shows online video and mobile adtech markets continue to consolidate, with $17.5 billion in acquisitions generated to date across all vendor-related adtech categories since 2005, with 2014 and 2015 documenting peaks exit dollars, and more to come.

Looking at 2016, $776 million in deals account for 4.4% of total M & A deals done, with current year’s total reached at an average topline revenue exit multiple (run-rate) of 1.90x.

Historically, up to the present time (and including Google’s acquisition of DoubleClick), these sectors have commanded revenue multiple averages of 2.33x paid against topline revenue (which may in some cases include revenue share from inventory management prior to publisher payout or media costs), though the average is clearly trending downward.

Further analysis shows a 12.76x paid against gross profit, or net platform revenue, according to the multi-sector appraisal Digital Video and Mobile AdTech in the M & A Crosshairs 2005 – 2016: $17.5 Billion in Deals and Counting, with all data and analysis provided.

Ad networks and some ad clearing mechanisms control, manage or arbitrage inventory (i.e., media avails), and those revenue figures are included in the topline number.

Net platform revenue or gross revenue is revenue minus COGS (i.e., revenue minus any media costs associated with inventory management, network or ad clearing).

Revenue acquired at the time deals were finalized totaled $7.5 billion in topline, and $1.3 billion in gross profit. Even so, revenue is not necessarily a primary reason adtech acquisitions are made, regardless of core platform/device specialty.

These adtech deals are structured to satisfy two essential considerations: 1) Market positioning (i.e., buying market share) or shortening time to market; and 2) Acquiring in-process R & D or required pieces of technology to further in-house ad clearing initiatives. Those deals have typically been made at a premium.

For example, Google bought DoubleClick in 2006 for $3.1 billion and AdMob in 2010 for $750 million, both at market premiums.

The digital video adtech sector is more highly consolidated, at present, than its mobile adtech counterpart, according to the sector study.

This research study analyzes 88 deals, and is an essential investment resource for investors, venture capitalists, ad agencies, adtech vendors, media companies with significant exposure to digital advertising markets, advertisers and marketers, and includes:

  • Acquisition price
  • Topline revenue
  • Gross revenue (i.e., revenue minus any media related costs taken out at the COGS line)
  • EBITDA, where relevant
  • Market positions (networks, DSPs, SSPs, audience and marketing platforms—including Twitter, ad servers, DMPs, tech platforms and more)
  • Business models
  • Core solutions and services focus
  • A detailed analysis of each adtech sector and the market dynamics driving valuations
  • Growth forecasts for each segment, each vendor category and each vendor by adtech sector (desktop, mobile, cross-channel)
  • Revenue forecasts for independently or publicly traded adtech vendors

Revenue forecasts for independently operated and publicly traded companies

are included with potential M & A values applied for each based on current exit multiples.

An analysis of the $5+ billion in digital adtech acquisitions completed in the 2015 – 2016 timeframe reveals that large multi-platform corporations and publishers with global multi-platform adtech requirements are buying.

Time, Inc. (now being acquired by AT&T) bought Viant/Specific Media, turn-around specialists Vector Capital took Sizmek private in 2016, and major tech platform operators (i.e., Verizon’s purchase of AOL), and other international telecom operators have been buying over the past two years.

Vector Capital also acquired internet radio adtech specialist and metrics solutions vendor Triton Digital in 2015.

Publicly traded digital video and mobile adtech firms currently trade at a steep discount compared to private market deals, an average of .72x run-rate 2016 revenue, excluding Twitter.

Including Twitter, publicly traded digital video and mobile adtech firms are trading at 2.32x run-rate revenue, while private market deals averaged 1.9x topline in 2016.

If a buyer steps up, the social networking audience platform Twitter is likely to be one of the largest deals in 2017 - 2018, with a valuation well in excess of $1 billion.

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FEATURED COMPANIES

  • AOL
  • AT&T
  • DoubleClick
  • Google
  • Sizmek
  • Time, Inc.
  • MORE

SECTION ONE

    GLOBAL DIGITAL VIDEO AND MOBILE ADTECH DEAL VOLUME AND EXIT MULTIPLE ANALYTICS: 2016
    KINETIC MARKET RESPONSE: M & A VOLUME AND EXIT VALUATIONS REFLECT MATURATION OF PUBLISHER MONETIZATION REQUIREMENTS
        M & A Trigger: Increasing cross-channel media inventories accentuate publisher demands for more in-house IT control
        Eighty Eight (88) Digital Video and Mobile AdTech M & A Deals analyzed 2005 - 2016
    DIGITAL VIDEO AND MOBILE ADTECH M & A GENERATES $776 MILLION IN 2016 DEAL VALUE
    2005 - 2016 M & A MARKETPLACE WORTH A MULTI-YEAR TOTAL OF $17.56 BILLION IN EXIT VALUE
    REVENUE AND GROSS PROFITS ACQUIRED IN SECTOR M & A ARE LESS IMPORTANT THAN SWIFT TECHNOLOGY LEAPS
    ADTECH TOPLINE AND GROSS PROFIT MULTIPLES HAVE CONTINUED TRENDING DOWN THROUGH 2016
        $5 Billion in digital video and mobile adtech deals in 2014
    ADTECH M & A IN 2015 - 2016 HAS FOCUSED ON CROSS-PLATFORM AND MOBILE MEDIA TECHNOLOGIES AND MARKET SHARE
        Major publishers and technology/services and operators are buying
    PUBLICLY TRADED ADTECH SOLUTIONS ARE VALUED AT A DISCOUNT COMPARED TO PRIVATE MARKET M & A IN 2016
        Publicly traded video and mobile adtech companies have significant cash on hand
        Twitter Publicly Traded Valuation at 3.87x run rate revenue
    ADTECH VENDORS WITH A DESKTOP CONCENTRATION HAVE COMMANDED HIGHER REVENUE MULTIPLES AND TAKE-OUT DOLLARS
    NETWORKS, AUDIENCE/MARKETING PLATFORMS AND INTEGRATED ADTECH SOLUTIONS HAVE GENERATED HIGHER M & A DEAL VALUE 2005 - 2016
        M & A Valuation and Exit Multiple Analytics by Competitive Positioning, which includes:
            Audience/Marketing/Data Platforms
            DSP/SSP Programmatic
            Network/AdTech Platforms
            Exchanges/RTB/Bidders/Auctions/Programmatic
            Ad Serving/AdTech Platforms
            AdTech Platform/Services/Campaign Management
        Pu4blicly traded adtech firms trade at .72x revenue (minus net debt)
        Audience and marketing platform exit multiples average 3.09x topline revenue
        DSPs and SSPs average 2.23x topline revenue
        Networks and tech platforms have averaged 5.25x led by Google's acquisitions of DoubleClick and AdMob
        Auctions and exchanges have averaged 1.45x
        Ad serving and inventory management platforms have averaged 1.79x
        Analytics, data and campaign management solutions have averaged 1.75x
    RECENT EXIT VALUATIONS SUGGEST $7.6 BILLION TO $26.6 BILLION IN POTENTIAL ADTECH ACQUISITION PROSPECTS
        Potential M & A Valuations include publicly traded digital video and mobile adtech companies

SECTION TWO

    DIGITAL VIDEO ADTECH REVENUE AND M & A EXIT VALUE ROUNDUP 2016 - 2018
    ESTABLISHING M & A VALUATIONS: EXIT MULTIPLES TIED TO PRODUCT POSITIONING INSIDE PUBLIC AND PRIVATE VIDEO ADTECH ECOSYSTEM 2016 - 2018
    SCALE, EFFICIENCY AND CONFIDENCE: OPTIMIZING AGAINST DEMOGRAPHICS, AUDIENCE REACH, DEVICE AND IMPRESSION TRANSPARENCY
        Consolidation a4d Greater IT Control Create M & A staging zone: Inventory management, trafficking and the media clearing ecosystem 2016 - 2018
        Digital Video AdTech and Audience Platforms are tightly integrated
    DIGITAL VIDEO ADTECH ECOSYSTEM GROSS PROFIT REVENUE FORECAST AT $15 BILLION IN 2016, $18.5 BIILLION IN '17, INCLUDING RELATED GOOGLE AND FACEBOOK OPERATIONS
    VIDEO ADTECH SECTOR INDICATES A 27% SHARE IN 2017 ACQUISITION VALUE POTENTIAL
        M & A Valuation Outlook: 2018 Estimated at 28% in Potential Share of Sector Revenue
        Publicly traded video adtech vendors continue to grow revenues at a rapid pace, though trade at a steep discount compared to private M & A deals
        2017 M & A potential frames a $3.6 billion to $12.5 billion market
    DIGITAL VIDEO ADTECH AND SERVICES MARKETPLACE WORTH AN ESTIMATED $14.9 BILLION IN 2016
        Video adtech platform technologies capture 28% of market share in 2016; DSPs 20.1%
        $5 billion in topline revenue forecast for independent and publicly traded adtech firms in 2017
    VIDEO AD NETWORKS, PLATFORMS, DSPs, SSPs, PROGRAMMATIC SYSTEMS: REVENUES AND POTENTIAL M & A VALUE BY SUB-SECTOR 2016 - 2018
    DIGITAL VIDEO ADTECH AND ADVERTISING TERMINOLOGY AND DEFINITIONS

SECTION THREE

    MOBILE-CROSS-CHANNEL ADTECH M & A ROUNDUP 2016 - 2018
    GLOBAL MOBILE M & A: IP, IN-PROCESS R & D, AUDIENCE DATA, AD SPEND AND COMPANY POSITIONING DRIVE RICH MULTIPLES
        Mobile adtech geographic reach, inventory growth and R & D advancements in predictive consumer behavior solutions are behind strong M & A valuations 2009 - 2016
        Global mobile adtech M & A has generated $4.3 billion in deal value 2009 - 2016
        Topline revenue multiples average 2.25x, though trending down significantly over the past several years
        Though unique as an audience and marketing platform, current take-out multiples could mean a lower valuation for Twitter going forward
        Consolidation Crosshairs: $6.2 billion in potential global mobile/cross-channel adtech M & A in 2017 applying low-end exit multiples
        High-end exit multiples frame a $21 billion potential M & A market in 2017
        Vendors believe further consolidation necessary for overall sector financial health
        Twitter in the 2017 M & A mix
        2017 Mobile AdTech M & A Valuations indicate a market worth from $6.2 Billion to $21.7 Billion
        A $34.6 billion total vendor marketplace in 2017, including Google, Facebook and Twitter
        2017 Sector Growth Projected at 27.5%
        Consolidation has also occurred in market solutions positioning
        Vendors do more to maintain marginal performance
        Audience and marketing platforms are growing at the pace of the market; forecast to increase revenue share through 2018
    MOBILE ADTECH PLATFORMS, MEDIA AND INVENTORY: TERMS AND DEFINITIONS

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  • AOL
  • AT&T
  • DoubleClick
  • Google
  • Sizmek
  • Time, Inc.
  • Triton Digital
  • Twitter
  • Vector Capital
  • Verizon
  • Viant/Specific Media
Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown
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