It’s no secret that the ad tech industry is rapidly consolidating due to a rise in acquisitions. This massive consolidation has become “the norm,” and greatly impacts the way marketers utilize advertising technology.
Why the rise in acquisitions?
First, innovative solutions are created by small ad tech companies devoted to creating game-changing tools. Then, larger companies recognize the valuable opportunities in online and mobile advertising that these tools provide. Finally, enormous companies swallow up the small innovators at breakneck speed.
What is Driving the Acquisition Boom
Massive demand for successful apps and digital platforms
For advertisers, mobile usage is growing exponentially. Recently, mobile ad spending has increased at the expense of desktop, taking more and more of marketers’ digital ad share.
Check out these mind-blowing projections:
- In 2015, mobile ad spending in the US will increase by 50% over 2014
- $28.72 billion will be spent on mobile ads in 2015
- Mobile will account for 49% of 2015 digital ad spend
- By 2019, mobile ad spending will rise to $65.87 billion and comprise 72.2% of total digital ad spend
Marketers need better tools
Merging technologies can create a more accurate and efficient way for marketers to reach their target audience.
A great example of this is the Google/Twitter deal made in May 2015. This deal stated that tweets would be available in Google search results. Suddenly a 140-character update about your recent purchase of a cell phone could be scooped up by an ad-serving company and be used to direct a Twitter ad your way about mobile accessories.
Increased demand for ad tech transparency
As marketers spend more on digital advertising, they are also demanding more insight into the ROI. This bottom-line focused clamor is putting the pressure on ad tech companies, and increasing competition.
As pointed out by the Wall Street Journal, the major challenge for ad tech companies is meaningful result data. Because online advertising is primarily measured by impression and clicks, companies are left wondering:
- What should I do with these results?
- How can I apply these numbers to my overall business?
- How do I use this to grow revenue?
Based on these reactions, digital advertising vendors are continuously working to prove they can provide more than just views and clicks. They are focused on proving that their services convert into real revenue.
How Ad Tech Acquisitions Will Affect Marketers and Advertisers
Bigger budgets are becoming absolutely essential
As digital marketing becomes increasingly crucial to business strategies, 80% of companies intend to raise their digital marketing budgets throughout the next 12 to 18 months.
This growth indicates an increase in consumer demand for digital marketing and advertising. In turn, ad tech vendors are looking to fulfil this demand by acquiring inventive new solutions, which drives even more demand.
Acquisitions are giving us a simpler solution
Marketers and agencies would rather avoid the hassle of dealing with multiple firms and managing multiple relationships. It is time consuming and expensive.
According to a comprehensive article from DigiDay, Marketers are looking for simpler, full-service solutions. Consequently, many ad tech companies will:
- Create new capabilities
- Merge with others
- Fall behind (Unfortunately!)
Fewer options, higher costs, & less competition
Ad tech consolidations mean more limited options. Giants like Google and Facebook are acquiring companies with the most cutting edge technologies, leaving digital marketers with limitations in where they choose to advertise. This also means higher costs for advertisers because of reduced competition.
The Final Word
Fortunately, consolidation will offer:
- Sensible standardization
- Improved advertising quality
- More clarity among advertisers
- Better tools to reach your target audience
Unfortunately, consolidation creates:
- Higher costs to market products, services, brands etc.
- Decreased competition (fewer options)
- Challenges keeping up with technology learning curves