In recent weeks I have been keeping an eye on Brian Wieser’s research, which has been keeping my inbox full with consistent updates, and Brian’s notes have been delivering very keen insights about the complex world of advertising technology (AdTech) and marketing technology (MarTech). As the space is highly dynamic and continuously evolving, I asked Brian about his broad thoughts on the sector and what may be in store for the future. As Brian is a former agency executive with great passion for the industry, he is well ahead of the curve relative to his peers.
–Richard Posluszny, Marketing Manager, Datorama
1. Brian, you’ve been an all-star covering this space for quite some time. We’ve got to ask: What’s been one of the biggest changes you’ve seen as the MarTech space has rapidly evolved in the past five years? Where do you see it going?
First off, thank you! I’m just trying to keep up on the space.
I think the biggest long-term change is the growing points of connection between what we’ve called MarTech and what we’ve called AdTech. Marketers are better positioned than ever to organize their data assets and look for new ways to apply that data to paid, owned and earned assets, and increasingly integrate those assets.
2. What’s your perspective on the initial public offering (IPO) scene in the AdTech and MarTech space? Are valuations going to become richer? Will IPOs accelerate in the coming years or is there still quite a bit of maturation that must happen within these industries?
In general, I’d argue that small companies, under let’s say $1 billion of market capitalization, should not be publicly traded. This especially applies if they operate in complicated or fluid sectors, as investors and analysts will be hard pressed to justify the time and resources required to understand those companies. This rules out most of AdTech and MarTech as candidates for success as public companies. Consolidation among the smaller private AdTech and MarTech companies will help, as this will both smooth out the volatile elements that individual companies may have, and would add to scale and make for more attractive public companies.
3. How about the mergers & acquisitions (M&A) arena? Do you have any particular take on how many of the AdTech and MarTech players that have proprietary technology or synergies with larger organizations may be targets in this highly fluid space? Will there be a massive consolidation or will we continue to see the expansion of best of breed?
There is a positive story for AdTech and MarTech in M&A. That’s because there are so many large companies, in a variety of industries, that think they can build out an advertising or marketing-related business with the technology and people that AdTech and MarTech organizations tend to have. This means there will be a lot of targets and a lot of sales, especially if the prices are affordable. Unfortunately, there will probably only be a small number of successful acquisitions over the long run. I think best-of-breed solutions may continue to exist as stand-alone companies, but they may not be large companies necessarily.
4. Over the past 12 months, it seems to have become clear that the large advertising platforms are having significant issues related to measurement. Simply put, the data is not accurate. How do you anticipate this will impact the Fortune 1000, big brand marketers as well as the large agency holding companies as they try to properly understand their spend and their respective audiences?
Large marketers are increasingly scrutinizing the quality of the data they receive — and the ad inventory as well, in light of the ongoing YouTube debacle. That doesn’t mean they won’t continue to spend money with flawed media owners, but they will require ongoing improvement to help solve for the problems they are concerned about. If media owners meet advertiser needs at this kind of tactical level, then spending growth can continue.
5. In addition, there’s also been problems related to advertising quality and brand safety with one player significantly cutting its spend with a platform. Is this merely an early sign of things to come?
The broader theme here is that advertisers are increasingly applying scrutiny to their digital advertising. I think we’re going to see this as a trend that continues for the foreseeable future.