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AdTech & MarTech Barometer – Q3 2016 Market Review

By Daniel Lee 11 Oct 2016

Welcome to the Q3 2016 edition and second anniversary of the AdTech & MarTech Barometer – Results International’s quarterly market update for the global advertising and marketing technology sectors.

Q3 2016 marks the second anniversary of the AdTech & MarTech Barometer. Over the last 2 years we have covered almost 1,000 deals worth $42bn, seen 9 IPOs, 11 ‘take-private’ acquisition announcements and witnessed the AdTech & MarTech stocks that we cover rise 34% in aggregate market value in what has been a relatively challenging environment.

Q3 2016 continued to build on the strong momentum seen in Q2 with M&A close to record levels, two new IPOs and sizable fundraises for a range of innovative companies from Pre-IPO rounds to Series A. The public markets were also trending positively, with over 80% of the stocks we cover rising over the quarter.

The quarter began with the largest AdTech deal on record, the anticipated announcement of Verizon’s successful $4.8bn bid for Yahoo!, and ended with the largest Western move by an Asian acquirer in Orient Hontai Capital’s $1.4bn majority acquisition of Applovin – a largely bootstrapped mobile AdTech company that raised a total of $4m before securing a $1.4bn exit four and a half years later. Applovin is the latest highlight in a year where the West has seen multiple ambitious moves from the East, particularly focused on mobile AdTech. Other notable acquisitions by Asian buyers this year include Smaato’s acquisition by Spearhead in Q2 and the proposed acquisition of Opera Software by a consortium of Chinese Internet firms in Q1. With 331 deals already announced this year, AdTech & MarTech M&A is on track to top our previous best year on record: 428, recorded in 2014 – the year we began the AdTech & MarTech Barometer.

Q3 also saw the welcome return of the IPO market, one that had been silent for the previous four quarters. The hotly anticipated IPO of The Trade Desk buoyed investor hopes with its strong growth and highly profitable business model and succeeded in gaining 67% on its first day of trading. Supported by the similarly successful IPO of Gridsum, the IPO market is open for business and we are excited to see which AdTech & MarTech companies will follow suit.

In the fundraising market there was notable activity in the later stage market, with potential IPO candidates Teads ($47m), Zeta Interactive ($45m) and Kaltura ($50m) all securing sizeable funds, as well as in the early stage Series A & B markets with disruptive companies including Vertebrae (VR AdTech), Beeswax (Customisable DSP) and Zenreach (offline SMB marketing automation) being rewarded for innovation with $10m+ rounds.

Whilst there are many positive trends, and AdTech does appear to be emerging from the lows of the last couple of years, the fundraising and M&A environment for undifferentiated propositions with no barriers to entry remains challenging; innovation remains a key driver of value and consolidation. The re-opening of the IPO market however will likely result in improved market liquidity, which is good news for all and should provide additional buoyancy to an already exciting M&A market. This, coupled with the emerging buyer groups from the East, makes the current AdTech & MarTech landscape one of the more exciting we’ve seen in our two years of AdTech & MarTech Barometers.

Click on the image below to view the report.

 

PowerPoint Presentation

 

We hope that you enjoy the document and look forward to discussing the data and underlying themes with you. If you are contemplating corporate activity in the space, please do get in touch. We have also produced our view on the previous quarter’s proceedings in a series of other market reviews on:

Digital Services

Enterprise Software

SaaS

HealthTech

Cybersecurity

The Tech Report (all 6 sectors)

 

Daniel Lee

Vice President

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