• by Tyler Loechner , Staff Writer @mp_tyler, August 1, 2013

Siemer Ventures, the investment arm of Santa Monica-based merchant bank Siemer & Associates LLC, is expected to publish an ad tech industry report tomorrow. The firm gave RTM Daily an inside look at the report, which is titled "The Imminent Ad Tech Shakeout: Is Consolidation in the Horizon?" The title echoes what MediaPost's Agency Daily wrote earlier this week, which is that the PubliCom merger is expected spark a new wave of Madison Ave consolidation.

Siemer points to the high number of "point solutions" - ad tech companies that serve a very specific purpose - as the reason for the "unsustainable number of players" not just in digital, but also in mobile, search, video, and social.

Looking at the past 10 quarters, the number of venture capital investments in ad tech businesses have declined. On average, there were 98 deals per quarter between and including Q1 2011 - Q1 2012. That figure dropped to just under 60 per quarter between and including Q2 2012 - Q2 2013.

However, the number of mergers and acquisitions have doubled when looking at first half 2012 versus first half 2013 year-over-year data. The Siemer study says, "Investors in the ad tech space are losing patience with slow returns, pushing their companies to either find buyers or show a clear path to profitability."

As more agencies and advertisers look to use single stack solutions rather than a plethora of point solutions, it seems obvious that consolidation will continue. Additionally, ad tech companies that have gone the public route have struggled, and the top 10 vendors still rake in 73% of the industry's revenue. The relatively small number of big fish in the sea will make M&A activity easier.

Siemer's numbers suggest that consolidation has already begun, but their report also shows that the industry has a long way to go.