The news that Sizmek has entered into a definitive acquisition
agreement to buy Rocket Fuel at a $145 million valuation is more evidence of how overcrowded the ad-tech market has become.
As more players entered the market, each claiming to
better serve a different aspect of the ad tech ecosystem, the strength and staying power of the Facebook-Google duopoly became increasingly clear. Small players that may have entered the market on a
high -- like Rocket Fuel -- have fallen behind, with acquisition the only answer to survival.
Industry executives who offered commentary on the Rocket Fuel acquisition told
Digital News Daily to expect further consolidation of ad-tech firms going forward.
Matthew Fanelli, senior vice president of digital at MNI Targeted Media, a subsidiary of
Time Inc. was one: ““The landscape is constantly shifting and changing, with multiple players looking to gain new market share while reducing complexity,” he said. "It is becoming
clearly evident that it makes more financial sense to acquire an existing tech stack versus creating one from scratch. It also increases speed to market, which is of the utmost importance. It is the
key to survival.”
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This Monday Rubicon Project acquired nToggle
for $38.5 million. And Merkle bought data firm Aquila Insight for an undisclosed
amount, which announced in in early July.
A similar trend was evident overseas, Last week, global holding company ISPDigital acquired a majority stake in Antevenio, which has a strong presence in Southern Europe and
Latin America.
“Many ad-tech companies started out believing profitability could be attained at a certain scale,” explained Mike Seiman, CEO of Digital Remedy.
“With margin compression happening globally, that scale has exponentially increased, forcing many companies to operate unprofitably at the same scale in terms of topline revenue. Where once we
were talking about a billion in topline revenue to achieve profitability, it now could take double digit billions to get there. At that scale, what is required to provide a quality service to a
multitude of clients is tremendous.”
Let’s see what comes next. There's undoubtedly more consolidation to come.