The M&A advertising market has been tepid this year amid a decline in ad spending, soaring borrowing costs and lingering uncertainty about the economy.
But many industry experts predict that deal flow will return again in 2024. Some of the consolidation is likely to be driven by necessity for some players who have struggled to make their way over the past 12 months.
“After a slow 2023, I expect to see an overall increase in M&A activity next year, driven by the continued lack of financing opportunities for smaller, lean and unprofitable businesses,” said Paulina Klimenko, Chief Growth Officer at PubMatic .
But other areas will be driven by livelier trends. Advertising industry groups forecast that global ad spending will grow between 4% and 7% in 2024, driven by political ad spending in the US and global sporting events such as the Olympics. The rise of emerging trends such as AI, connected TV and retail media may also drive acquisitions by strategic buyers.
Plus, 2024 is set to be the year the world’s most popular web browser, Google’s Chrome, turns off third-party cookies, causing a loss of targeting and measurement signal that could force many industry players to take advantage of new technologies.
Business Insider polled advertising industry experts — from consultants to bankers to analysts, investors and advertising leaders — who named the companies likely to be active in the ad M&A market in 2024. The companies listed did not provide comment unless in other words.
Tightening European regulations — particularly around data privacy and training AI models — will make it increasingly difficult for big tech platforms to access data and target ads. But it’s an area where consulting firms can benefit, according to Tom Henriksson, general partner at venture capital firm OpenOcean.
“Consultancy firms have an opportunity to address gaps in clients’ marketing technology stacks through ad technology acquisitions,” Henriksson said.
Both Henriksson and Chris Sahota, chief executive of M&A consultancy Ciesco, highlighted Accenture as a likely active acquirer of advertising businesses in the coming year. Accenture has acquired dozens of advertising businesses in the past few years, including Droga5 and Japanese marketing firm SIGNAL.
Sahota noted that Accenture has said it plans to invest $3 billion in AI technologies over the next three years and double its AI workforce to 80,000 through a combination of hiring, acquisitions and training.
With Amazon’s advertising business again expected to post double-digit growth for fiscal 2023, Javier Rodríguez Horta, head of the global marketing strategy practice at CvE, a marketing consultancy, said Amazon could look to supplement its existing advertising business by acquiring start-ups that specialize in data and analytics, retail technology or logistics.
Chris Sahota of Ciesco
Ad verification and performance firm DoubleVerify had a strong 2023, expecting full-year growth of around 27% in the middle. He also improved his offering with his $125 million acquisition of AI-powered advertising firm Scibids this summer.
He is ready to make more acquisitions. DoubleVerify’s stock price is up more than 60% year-to-date, the company has more than $250 million in cash and cash equivalents on its balance sheet and no long-term debt.
Andrew Backman, vice president of marketing and investor relations at digital ad platform Azerion, noted that DoubleVerify has announced many strategic partnerships in the past year “that are good precursors to investments and acquisitions.”
4. There is
Havas has maintained a steady acquisition rate over the past few years and the French agency group is the top strategic buyer in 2022, according to Ciesco.
Its parent company Vivendi recently announced it would explore spinning off several of its business units, including Havas, broadcaster Canal+ and publishing and distribution group Lagardère.
Havas is already experiencing strong international growth, and to maximize its growth potential, Vivendi is likely to explore incorporating the agency as a separate public company.
“Anticipating their acquisition momentum, we expect their buying activities to continue in 2024,” Sahota told Havas.
As for what types of companies Havas might choose, Mark Goldberg, CEO of consulting firm Stages Collective, said ad holding companies may look to buy contextual advertising solutions. These solutions could complement their acquired legacy data or could help them develop tools that identify people online without cookies.
5. Matching group
Dan Salmon, partner at New Street Research, believes Match Group could be a “dark horse candidate” to acquire ad tech assets in 2024. Advertising isn’t new to dating apps, but with the slow growth of paid users post-covid, dating companies could look to expand their ad offerings in the coming year to further diversify their revenue.
“While organic growth and partnerships are the most likely path, online dating companies could accelerate ad product development through small acquisitions of mobile ad technology,” Salmon said. “With strong free cash flow generation, a company like Match has a lot of dry powder to make transactions.”
Match CEO Bernard Kim told the New Street Research Online Dating Summit in March that “advertising should be an important business for us, but it will take some time to get there.” He added that it could grow to a $100 million business over time, from about $50 million currently. Targeted acquisition can boost this growth.
Nexxen, rebranded by Tremor International Group this year, is an acquisitions company, having bought TV ad platform Spearad and video ad firm Unruly in recent years. It also completed the acquisition of search platform Amobee in 2022.
Azerion’s Andrew Backman noted that the company has almost $200 million in cash and cash equivalents on its balance sheet and has recently bought back a lot of shares, which could signal an appetite for acquisitions in 2024.
Nexxen said in its latest financial report that it expects to use its cash resources for future potential strategic investments, initiatives and acquisitions “over the medium to long term.”
7. Private equity
With ad spending expected to recover in 2024, PubMatic’s Klimenko said private funds are likely to take renewed interest in ad tech companies.
Providence Equity Partners, Waterland and KKR were the most active PE acquirers in the advertising space between 2022 and 2023, according to Ciesco. Other notable deals last year included the acquisition of One Equity Partners by creative and technology group MSQ Partners, which is now planning further international expansion. Elsewhere, PE firm Novacap acquired TV ad company Cadent in a $600 million deal. Cadent is now planning a series of acquisitions to help grow the platform, company CEO Nick Troiano told Business Insider this August. In Europe, Bridgepoint has acquired a majority stake in French ad tech firm Equativ.
“Private capital has have developed a strong interest in this sector in the last few years led by businesses in the sector, have proven to be scalable, profitable, flexible and cost-effective,” said Chris Sahota of Ciesco.
8. The Trade Bureau
As the ad industry prepares for the death of the cookie, The Trade Desk “will consider acquiring companies that help strengthen their identity game,” said Mark Goldberg, CEO of consulting firm Stages Collective.
The Trade Desk already has its Unified ID 2.0 solution that helps marketers target and measure without cookies, but could look to beef it up with an identity specialist that needs the scale of an advertiser client base like The Trade’s Desk to succeed, according to Goldberg.
Last year, industry insiders speculated that The Trade Desk might acquire fellow ad firm Criteo, but the deal never materialized. The company has about $1 billion in cash and cash equivalents – more than enough to use for a meaningful acquisition.
Experts at venture capital firm OpenOcean expect retail ad media to be the strongest growth market in 2024. Walmart has already nearly doubled its ad business in two years, adding new measurement partnerships and recently expanded its in-store ad network.
A recent Bain & Company survey of hundreds of US advertising decision makers found this 50% of respondents expect to consolidate spending with fewer retail media networksas large and established players like Walmart are expected to benefit from this consolidation.
However, bridging the retail media scale gap with Amazon will be an uphill battle without targeted acquisitions, said Tom Henriksson, general partner at OpenOcean.
“Expect Walmart to be an aggressive industry consolidator making strategic acquisitions in 2024 to obtain the ad technology capabilities needed to continue to grow its retail media business,” Henrikson said.