Ad tech used to generate most of the hype when it came to high-growth ad industry startups.
But as the category matures, services firms that help brands navigate the complex world of digital advertising are growing faster.
That’s the story in Inc. Magazine’s 2020 revenue survey charting the fastest-growing private companies in America, released Wednesday. The annual list tracks three-year revenue growth of independent companies across verticals. Despite being a revenue survey, this year’s list … does not actually break out revenue figures as it did in the past.
Among the agencies on the list, performance agency Wpromote clocked in at No. 2,770 at a 173% growth rate over the past three years. Tinuiti, which specializes in helping clients navigate platforms, such as Google, Facebook and Amazon, ranked 2,398 on the list, also growing 173%. And digital media agency Programmatic Mechanics took the No. 2,337 spot, posting 179% growth.
Indie digital agencies are accelerating because, despite ad tech consolidation, marketers still don’t have time to wade through all of the vendors in the market, said R. Ray Wang, principal analyst and founder at Constellation Research.
“Digital agencies are doing really well in part because there’s too many ad tech companies,” he said. “None of these marketers have time to figure it out on their own.”
A handful of agencies that ranked on the survey also offer specialty expertise, whether that’s by client vertical or as part of their service offerings. Marketers want deep vertical and technical talent, and a lot of independent firms are small, scrappy and founded by ex-agency execs, Wang said.
“It’s people they know,” he said. “It’s relationship based.”
Constellation Agency, for example, which ranked No. 65, (no relation to Constellation Research) does digital marketing for auto advertisers and has seen its revenue grow 4,865%. H Code, which is No. 977 on the list, helps brands connect with US Hispanics through digital media, and has grown 471%. And then there’s No. 839 on the list, Ntooitive Digital, which offers specialty marketing services for publishers and grew 568%.
Agencies that are embracing new staffing models are also picking up steam, such as Hawke Media, which outsources in-house marketing talent for brands and ranked 1,508 on the survey with 137% growth.
“If there’s any part of the business that’s on fire, it’s digital agencies,” Wang said.
Ad tech pulse: weak
Growth in the sector has slowed as it matured and consolidated, while large-scale tech companies continue to dominate.
Firms that made last year’s Inc. list were missing this time around, including Beeswax, VideoAmp, AppsFlyer, Index Exchange and Mobilewalla.
Header bidding solutions provider Freestar remained on the list – only to be bumped down from the No. 1 spot last year to No. 36 this year, as growth slowed from 36,680% to 7,239%. TripleLift also slipped from No. 562 to No. 1,402 this year. And the DSP Choozle came down to No. 2,421 this year from No. 985 last year.
An overcrowded market, a tempered VC environment and domination by large platforms (see: Facebook, Google and Amazon) have contributed to ad tech’s decline, Wang said. And there’s still more consolidation to come.
“If we had 20 ad tech companies in a category, we’re probably down to 10,” Wang said. “That’s still more than necessary.”
But growth is not slowing for all ad tech companies. Computer vision and AI company GumGum, which did not make the 2019 list, ranked No. 2,297 this year with 182% growth.
Surprisingly, CTV ad tech companies were missing from the list, despite connected TV being the new hotness. According to Wang, there’s increasingly less opportunity for ad tech to thrive as broadcasters embrace ad-free subscription models.
“The space is falling apart because it’s [built on] membership models,” Wang said.
Below are highlights from the 2020 survey in descending order based on a three-year growth rate. (Click here to check out last year’s list.)
No. 36 Freestar, 7,239%
No. 65, Constellation Agency, 4,865%
No. 526, MagicLinks, 874%
No. 839, Ntooitive Digital, 568%
No. 937, Mavrck, 497%
No. 977, H Code, 471%
No. 999, Conversion Logix, 461%
No. 1,128, AdCellerant, 401%
No. 1,402, TripleLift, 317%
No., Hawke Media, 292%
No. 1,530, Scrum50, 287%
No. 1,679, OMG Commerce, 256%
No. 1,905, Bluecore, 221%
No. 2,039, Gimbal, 207%
No. 2,217, Bombora, 189%
No. 2,243, Optmyzr, 186%
No. 2,297, GumGum, 182%
No. 2,337, Programmatic Mechanics, 179%
No. 2,398, Tinuiti, 173%
No. 2,410, Madwell, 172%
No. 2,421, Choozle, 171%
No. 2,573, InfoTrust, 159%
No. 2,722, FIG Agency, 148%
No. 2,770, Wpromote, 145%
No. 2,883, January Digital, 137%
No. 3,018, inPowered, 130%
No. 3,291, BEN, 115%
No. 3,316, Wrapify, 113%
No. 3,753, Stirista, 96%
No. 3,968, Pixability, 88%
No. 4,112, iQuanti, 84%
No. 4,511, AdTheorent, 70%
No. 4,990, Ad.net, 55%