In the past few weeks it has been rumored that several ad tech companies are preparing for initial public offerings, adding to the most robust IPO market in five years.

Adweek spoke to several on-site analysts to assess whether the latest reports suggest a repeat of the crash-and-burn bubbles in past investments or whether the industry is entering a new phase of substantial value and growth.

Last week, Bloomberg reported that DoubleVerify was preparing to go public. The content review company is reportedly trying to raise $ 500 million valued at $ 5 billion.

In early October, CNBC reported that AppLovin – a $ 2 billion company that has ad tech products but is increasingly moving to mobile games – has hired Morgan Stanley to prepare for an IPO in 2021 .

Echoes of the early 2010s

This rapid pace of dramatic activity surprised investment analysts as the recent history of ad tech performance in the financial markets has not been littered with success.

The Trade Desk’s market cap this week was over $ 30 billion, an exceptional track record. By comparison, the average market capitalization of each of the major holding groups in the industry was closer to $ 10 billion.

In the first decade of the century, venture capitalists inundated the ad tech sector with funding as they all hunted for “the next Google”. In the early 2010s, there were a number of IPOs in the US markets between 2012 and 2014 (see below). .

Company’s IPO year Current status

  • Millennial Media 2012 sold to AOL (now Verizon Media) in 2015
  • YuMe 2013 Sold to RhythmOne (now part of Taptica) 2017
  • Tremor Video 2013 Split sold to Taptica in half of 2017 *
  • Rocket Fuel 2013 2017 sold to Sizmek and now to Zeta Global
  • Criteo 2013 Still publicly traded
  • Rubicon Project 2014 merged with Telaria, now called Magnite, in 2020
  • TubeMogul 2014 2016 sold to Adobe
  • The Trade Desk 2016 is still publicly traded

* The remaining half has been renamed Telaria and merged with the Rubicon Project

Arbitraging Media ≠ unicorn status

Sources told Adweek that everyone initially basked in the glow of the “new”, with many comparing them to Google, but they were soon found out.

Terence Kawaja, CEO of investment bank Luma Partners, told Adweek that many of these companies are just media dealers or advertising networks, a phenomenon that continues to this day and its value proposition is questionable.

“This previous wave of ad tech IPOs was primarily led by a ‘1.0 cohort’ of ad network companies that relied on a media arbitrage business model,” he said. “These companies have not done well with the rapid migration towards [actual] programmatic ad buying. “

It’s likely that many of these companies were forced to go public before their advertising technology was actually ready for public scrutiny by VCs to see an ROI, or “moment of liquidity.”

In 2013, not many people knew about ad tech. I mean, most of the investors didn’t know how to spell “DSP”.

Brian Wieser, Global President Business Intelligence, GroupM

Brian Wieser, GroupM’s global president of business intelligence and a former equity analyst, suggested that the initial honeymoon period between Wall Street and programmatic actors was largely due to ignorance of ad tech. The halo effect of other “tech stocks” like Facebook, which went public in 2012, also played a role in investor’s earlier enthusiasm for ad tech stock offerings.

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