After a relatively slow 2020, merger and acquisition (M&A) activity in the adtech sector has seen a significant surge in 2021 — one that goes well beyond the natural curve of the overall market. The past few years have set the stage for this moment, and we are now looking at a maturing industry that is ripe for — and, in fact, requires — consolidation to continue to fulfill its promise. Some of 2021’s most notable moves included the following:

  • June 2021: Verve Group, the mobile ad tech unit of the gaming publisher Media and Games Invest (MGI), acquired Smaato for almost $170 million (140 million Euros).
  • May 2021: Zynga agreed to buy mobile ad and monetization firm Chartboost for $250 million
  • February 2021: Digital Turbine, Inc., a global mobile tech company, reached a definitive agreement to purchase AdColony for an estimated consideration of USD $400m (£287.8m).
  • February 2021: Rubicon Project and Telaria merged to form Magnite, whose shares have jumped 5-fold with a market cap of almost $3.5 billion. Then, Magnite acquired video supply-side platform SpotX from RTL Group for $1.17 billion.
  • January 2021: Comcast’s video adtech company FreeWheel acquired SaaS DSP Beeswax. Earlier in the year, Comcast also acquired XUMO, an ad-supported streaming service.

Taken together, these industry shifts serve as a teaser to what we can expect to unfold over the coming year. For example, as of August 2021, there are reports that AT&T is considering to sell Xandr ad unit to InMobi. Beyond that, there has been two large IPOs (mostly gaming and media combinations) in 2021: AppLovin (raising at $1.8 billion+) and IronSource (raised 2.5 billion+). In other words, after being a relatively neglected sector for several years, digital advertising technology is back on investors’ radars in a big way. Investors today are seeing higher adtech evaluations, partly due to the ongoing marketplace consolidation. This consolidation helps the industry by elevating a handful of leaders within the otherwise over-fragmented space. This consolidation also opens room for the birth of new startups with innovative solutions.

The Forces Behind Adtech M&A in 2021

The forthcoming consolidation in digital advertising technology is a natural evolution of any space as fragmented as adtech right now. But it is also telling of the larger trends within the industry at present. Over the past three to four years, specialized vertical players have been looking to pivot toward new ambitions. For example, we saw rewarded video companies looking to launch their own open exchanges. Now, some are looking to run private marketplaces (PMPs), while others have tried to establish DSPs in-house.Despite marketplace-driven pivots, many adtech companies have still not been able to break the barrier to long-term independent sustainability. Many are, therefore, actively looking to join well-placed global organizations that can help them expand the specialized work they have been doing in recent years. In 2021, the industry is looking for global omnichannel platform players that can help advertisers, agencies, publishers, and other tech players leverage these platforms most effectively. While our industry generally recognizes the benefits of self-serve platforms, there are also several Tier-2 and Tier-3 players looking for managed services so they can avoid operational overheads and instead focus on sales. This is a reality that advertisers and investors alike will need to bear in mind as they place their bets.

In short, buckle up. Adtech in 2021 is going to be a fascinating ride