This week's acquisition of Media.net was a friendly reminder for the ad-tech industry that there is big money — global money in the case of Media.net — targeting the ad tech space.
To recap, a Chinese consortium of investors acquired ad tech startup Media.net for $900 million in cash, topping Google's $750 million dollar acquisition of AdMob in 2010 and Twitter's $350 million dollar acquisition of MoPub in 2013.
And Here Comes Kobe Bryant
But one hardly has to look to China for examples of investors looking for opportunities in the ad technology space. The same day the Media.net deal was announced, retired NBA god star Kobe Bryant unveiled a $100 million venture capital fund for technology, media and data companies. He is partnering with Jeff Stibel, a longtime entrepreneur and investor, in this Los Angeles-based venture, which is appropriately called Bryant Stibel.
Other examples, to cite just a few:
- Private equity company Vector Capital recently acquired Sizmek, a provider of programmatic advertising management solutions, in a transaction valued at $122 million
- Nextperf, a Paris-based provider of real-time ad optimization using machine learning, was acquired by Rakuten Marketing, a global digital marketing company. It plans to incorporate Nextperf's technology to help it expand into Europe, according to Tony Zito, CEO, Rakuten Marketing.
- And of course, last month Verizon Communications announced it would buy Yahoo's core internet properties for $4.83 billion in cash in a move to expand its digital advertising and media business
These deals represent the usual list of money sources backing technology — venture capital and corporate funds and increasingly, as Media.net's story shows, global companies. According to Media.net co-founder Bhavin Turakhia, there were seven bidders from around the world interested in acquiring the company.
The reason why money is being invested in these technologies may seem obvious when stated but it is still worth doing so: simply put, they are delivering returns.
No, I don't mean they are delivering results for the companies that use the technologies. They are delivering returns for the investors.
Big Potential ROI
A report earlier this year by AccuStream Research dissected the gains to be had from this tech sector. While most of the report available only for sale behind a paywall. the executive summary reveals plenty about ad tech's ROI potential.
Publicly-traded digital video and mobile ad tech companies are forecast to generate $8.9 billion in run-rate revenue, minus any media related costs, with 67 percent weighted toward mobile vendors operating globally, according to the report, Digital Video and Mobile AdTech Growth 2016 - 2018 Post M&A Consolidation: Forecasts for Publicly Traded, Independent/VC-backed and Acquired Vendors.
That figure, incidentally, excludes Facebook.
When the analysis includes Facebook, mobile is poised to capture 87.5 percent of the $24.1 billion in total revenue generated by publicly traded digital video and mobile ad tech platforms and vendors. (The majority of Facebook revenue is generated on the mobile platform with approximately 88.5 percent of daily active users on that platform.)
Independent vendors are estimated to grow revenues by 33.2 percent through 2018 (calculated from a 2014 starting date) and book 22 percent of total net revenue this year.
AccuStream's bottom line conclusion: This is a market segment worth $11.7 billion, or the equivalent of $22 plus billion in potential mergers and acquisitions, based on deals finalized for ad technology from the period 2006 through 2015.
So, Media.net — enjoy your moment in the sun. Another ad tech is likely to come along that is even bigger than yours.