Ad tech M&A is back, baby.
Earlier this month, four major ad tech deals captured headlines in just as many days. T-Mobile bought Vistar Media; ecommerce marketing company Rokt acquired customer data platform mParticle; The Trade Desk bought ad metadata startup Sincera; and DirecTV acquired a majority stake in addressable TV platform Invidi Technologies.
Until last fall, ad tech M&A had been tepid for a couple of years. Many buyers and sellers were holding off on major dealmaking due to economic uncertainty and a slowdown in ad spend, Uren Dhanani, VP at ComCap LLC, told AdExchanger.
ComCap is a boutique investment banking firm advising mid-market companies in ad tech and other high-growth tech categories. It started as an ecommerce-focused banking firm and still considers retail media to be its sweet spot. For example, ComCap was the sole advisor on data platform SmarterHQ’s sale to Wunderkind in 2022 and on the sale of Rakuten’s Brazilian division in 2019.
Dhanani said he expected the recent wave of ad tech consolidation. “There has been a lot of pent-up demand [while] M&A went through a lull period.”
This year, he said, ad tech consolidation will center on the biggest growth opportunities in advertising: retail media, connected TV and addressing the gaps in measurement. The latter is arguably the biggest pain point for marketers and media buyers right now, he said.
Dhanani spoke with AdExchanger about which ad tech consolidation trends we should keep an eye on in 2025.
AdExchanger: What will M&A look like for retail media this year?
UREN DHANANI: Retail media networks (RMNs) are no longer niche. Nearly every sizable retailer now has their own RMN for ad monetization. For the bigger retailers, RMNs are driving an increasingly bigger chunk of both revenue and profits.
We expect smaller, more niche RMNs to consolidate so they can stand a better chance against the bigger retail media giants like Walmart and Target.
Not all of the smaller players need to have their own RMN because the margins aren’t always enough to offset the investment. Their data, for example, could be more lucrative as a consolidated national service that provides shopper data across retailers to marketers.
What specific retail media trends are driving growth?
One rising trend in retail media we’re paying attention to right now is in-store advertising. More shopping happens in-person as opposed to online, so retailers and advertisers are trying to find more ways to serve personalized product ads to shoppers while they’re actually browsing the shelves. The trend is why some out-of-home tech providers like Grocery TV [a digital in-store ad network] are getting more attention within the industry.
We also expect future M&A efforts to focus on addressing issues in measurement. Retail media doesn’t have a great buying experience for brands right now. If you’re a CPG advertiser, for example, you have to buy inventory from each retailer individually, which also complicates campaign measurement. That system is inefficient and not sustainable long term for media buyers.
Speaking of video and measurement, how are opportunities and challenges overlapping between retail media and CTV?
Video ads for products at retailers are becoming more personalized on CTV, too, not just in stores. For example, programmers are also incorporating more retail data into video campaigns to make CTV ads more specific to consumer shopping habits.
We also expect to see more consolidation among smaller and more niche streaming services that are struggling to compete with larger streamers and digital pure plays.
As for challenges, retail media and CTV both have blaring gaps in measurement standardization. Measurement is definitely a No. 1 issue within both channels because of data fragmentation. Advertisers have difficulty comparing in-store and online sales across retailers the same way they struggle to measure streaming ad campaigns across networks.
How exactly do you expect measurement to guide M&A this year?
There’s a lot of innovation happening in the measurement space right now, including data and measurement companies cropping up to serve both streaming publishers and video currency providers. There is a growing number of players trying to solve this issue by creating cross-platform measurement methods and metrics, which speaks to how much retail and CTV brands are struggling just to calculate return on investment.
That being said, there is a lot of opportunity for companies to jump into measurement and attribution via M&A. These are the focus areas that investors are really interested in.
This interview has been lightly edited and condensed.
