Device[9] sells to Flashtalking in the latest round of ad tech consolidation
In the latest round of consolidation in ad tech, US-based FlashTalking has acquired Device[9] for an undisclosed fee as the industry sector is tipped to undergo further consolidation.
Flashtalking, essentially an ad server, made the announcement of Hamburg-based Device[9] this week – the cost of the deal was not disclosed although it did confirm the transaction was mostly in stock – in a deal that will better enable Flashtalking to help advertisers target audiences across screens.
Device[9] uses probablisitic targeting – a means of targeting that uses algorithms to model user behaviour, as opposed to simply tracking using cookies – to help advertisers reach suitable audiences with ads for products they are likely to buy, and is in contrast to deterministic targeting.
This model of targeting can help advertisers harness their conversion data (i.e. customers who bought products, etc.) and then link their purchase journey back to exposure to an ad, in order to attribute value to each media execution during their campaign assessment
Such targeting tactics are becoming increasingly popular as they help advertisers reach users across screens, especially on mobile devices (where cookies don’t perform as well, compared to desktop), and companies offering such solutions are likely to be popular with investors.
M&A activity in the ad tech sector doubled between 2013 and 2014, with the total number of deals surpassing 450, according to AGC Partners, with mobile and video advertising companies proving particularly attractive to buyers.
This trend has been tipped to continue in 2015 - the most notable of which was Verizon Wireless' $4.4bn purchase of AOL - but sources with knowledge of both ad tech and high finance are keen to point out that this is not necessarily good news for everyone.
Speaking at last week’s Dmexco conference Luma Partners chief executive Terry Kawaja, who advises investors over their planned moves in the ad tech sector, gave his take on the ongoing trend towards consolidation in ad tech.
He told attendees: “We’ve got this massive supply-demand imbalance. There’s 2,500 companies on independent companies across the Lumascape [a diagram famous in the sector which his outfit produced to map out how they all fit together], and there’s only about 200 strategic investors.”
Of this there’s only about 50 buyers “that matter”, and can buy at scale. He also said that only about 148 of the 2,500 independent companies, only 6 per cent, are likely to exit in deals surpassing $100m.
“There’s going to be a lot of blood in this ecosystem, as we approach a 90 per cent failure rate,” he said. See video below for the rest of his assessment.