Paid media is changing – and it looks a lot like what the advertising industry has seen before. Learn more about what this means for your paid media campaigns and their performance.

AdTech landscape throughout the 21^st century

Do you remember the ‘80s? What about the advertising of the ‘80s? It brought us the iconic “Where’s The Beef” from Wendy’s, but it’s also when mergers in the advertising agency consolidated independent agencies under the holding company model. Today, we’re beginning to see history repeat itself, this time in the AdTech space as it undergoes a similar consolidation.

In the 2000’s AdTech was an emerging space with companies specializing in various solutions for online advertising including ad verification, ad networks, exchanges, demand-side platforms, supply-side platforms, and audience builders. By early 2010 the digital ecosystem was filled with independent AdTech firms including The Trade Desk, MediaMath, Turn, DataXu, AppNexus, TubeMogul, Sizmek, Beeswax, Flashtalking, Rubicon Project, and Telaria.

Just as the rise in ad budgets and expansion into global markets necessitated the consolidation of ad agencies, so too are we seeing this across AdTech for those very same reasons. In the last decade, we’ve seen a spike in M&A activity among AdTech firms that has rivaled the one we saw among agencies in the 80’s. Some of the largest moves have included: 

• Google purchased the DSP Invite Media in 2010 and the SSP Admeld in 2011

• Adobe’s acquisition of TubeMogul in 2016, integrating it into Adobe Marketing Cloud to become Adobe Advertising Cloud

• The Trade Desk going public in 2016

• Amobee acquiring Turn in 2017

• AppNexus (Xandr) was acquired by AT&T in 2018 and then later by Microsoft in 2021

• Roku’s purchase of DataXu in 2019

• Rubicon Project and Telaria merging to form Magnite in 2020

• Comcast’s Freewheel buying Beeswax in 2020

Likely, this AdTech consolidation will only increase in the next decade as larger tech companies look to keep up with growing industry demands such as contextual targeting, a single cross-channel currency, CTV, cookieless solutions, and short-form content, among others. Similarly, smaller independent AdTech firms might see mergers or acquisitions as the best path forward to further expand their client list and avoid the fates of other AdTech firms that had to file Chapter 11, such as Sizmek back in 2019 and MediaMath in July of this year.

What does AdTech Consolidation mean for my business?

Now the question remains, with so many AdTech firms consolidating into larger organizations – is this a good thing for agencies and advertisers? At this point, there is no definitive answer, as there are both benefits and costs to this influx of mergers.

On one hand, having fewer vendors can be a good thing for agencies and advertisers for a variety of reasons:

• With one single stack, the budget will not have to be dispersed across a multitude of partners. This can lead to cost efficiencies, particularly if services are bundled together to reduce redundancy.

• Having all your tech capabilities (DSP, DMP, Dynamic Creative Optimization, Ad Serving, Analytics) under one integrated stack is also more efficient, leading to streamlined workflow, saving time for your team.

• With an integrated stack, platforms can provide more extensive reporting and analytics capabilities, allowing agencies and brands to glean deeper insights, and further ROI through more advanced data-driven decisions.

• With a single vendor handling multiple aspects of your marketing stack, you will likely just have one point of contact, rather than many different vendors, allowing for faster troubleshooting and more efficient resolutions.

And just as larger holding companies were better equipped to service rising ad spends from big brands, so too are large AdTech firms positioned to service a larger number of clients with more robust teams.

However, there are potential negative side effects to this consolidation as well. With fewer AdTech firms in the market, there will be less competition. With fewer companies competing against each other, there will likely be less innovation in the AdTech space as larger firms could be less incentivized to create new solutions due to the decreased competition. This could result in a dearth of the new products that made these AdTech companies so game-changing in the first place. Additionally, advertisers and agencies may be subject to higher fees due to limited alternatives in the AdTech space. This would lead to an increase in the overall costs of your advertising campaigns and reduce potential ROI.

With so many AdTech firms merging and consolidating, choosing an agency partner that can evaluate and recommend the platform best suited for your marketing needs (to avoid the higher costs and lower performance) is more important than ever. With ad tech consolidation, companies need to be more strategic than ever in choosing their tech stack. This requires a strong understanding of your program’s goals and how to achieve them through technology.

iCrossing, for example, has extensive experience working with a variety of AdTech providers including DSPs, SSPs, ad servers, onboarders, and data partners. By having a deep knowledge of these touchpoints, it’s easier to advise clients about the right tech stack that will deliver the best ROI.

 As we go through the 2020s, expect the AdTech space to look a lot different than it did a decade ago. We can always look to the agency transformation of the 1980s as a blueprint for how we can expect this to turn out. Luckily, this blueprint can prepare for the future and create forward-thinking paid media campaigns that maximize performance in the face of large industry changes.