Public Companies in the AdTech Space

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AdTech, short for Advertising Technology, has been an interesting space to invest in because of the scalability of the product offering. Companies in the AdTech space often get a higher valuation and market cap than service-orientated businesses, which are less scalable.

Many AdTech companies start first as private companies and are often backed by private investors, angel investors, or venture capitalists before they go public. As there are many AdTech companies, it is important to understand the differences and similarities. This article will focus on explaining the (investment) opportunities in the AdTech space.

What is AdTech

Advertising Technology (AdTech) is the technology that is designed to create, manage, and analyze digital advertising. AdTech, which has been developed in the right way, can be used by hundreds up to tens of thousands of users, making it able to spread the development cost over many users.

AdTech is often offered in the cloud via a subscription-based or SAAS (Software as a Service) model. Typically, more features and functionalities are being offered over time, increasing the stickiness of clients as the product they have been using evolves over time and could be adjusted to the current and future needs and market standards.

For established businesses, a subscription-based or SAAS model also brings the opportunity to predict future income as main metrics like the number of users, average subscription price, and retention rates are often available and easy to calculate.

Vertical & Industry-Specific vs. Generic

Some AdTech tools focus on specific verticals or industries, while others serve a more generic client base. There are AdTech tools that focus on the travel industry or e-commerce/retail industry, while others optimize B2B advertising campaigns. More generic advertising technologies will not focus on a specific industry but rather might be more specialized in a certain type of advertising, like programmatic advertising or connected TV (CTV).

The Difference Between AdTech and MarTech

MarTech, Marketing Technology, is a term for tools and applications to manage and promote digital marketing campaigns. AdTech focuses on creating and optimizing advertising campaigns that usually include an ad media budget and a cost-per-X model, which can be CPC, CPM, CPA, CPL, CPO, CPI, etc.

Advantages of Investing in AdTech

There are many advantages of investing in AdTech. Some of the most important advantages are listed below:

Scalability – the technology only needs to be built once and can be sold to a magnitude of users without incurring the same amount of costs
Predictability – monthly subscription fees are predictable and can be calculated
Future Proof – the digital advertising space has been growing over the last decades and keeps growing rapidly
Potential High Multiples – since the revenue of AdTech companies is often scalable and predictable, there are potential higher multiples on revenue than service companies get

4 Types of AdTech

There are different types of advertising technologies. Some tools focus on creating digital advertising campaigns, while others focus on campaign management, feed management, reporting, or a combination of multiple solutions.

Campaign Creation

AdTech around campaign creation focuses on the creation of campaigns. Often this is technology that can handle a large amount of creation tasks at once, taking over a lot of manual work, which saves a campaign manager a lot of time and potential errors.

Campaign Management

AdTech around campaign management is more focused on managing existing campaigns and often involves bidding, budget management, and creative asset management. The technology can manage campaigns at scale.

Feed Management

Feed management tools are primarily helping manage and optimize large inventory product feeds. These tools are typically important for e-commerce and travel-related businesses where many products, hotels, or flights are being managed. Feed quality is of utmost importance in realizing great results; feed management tools help create high-quality product feeds for advertising campaigns.

Reporting & Analysis

AdTech tools that focus on reporting and analysis are particularly strong in interpreting large data sets and giving insights that are hard or even impossible to get if these were analyzed manually.

Some AdTech companies offer part of the capabilities and features mentioned above, while others offer an extensive suite of solutions that even goes beyond the listed categories.

Public AdTech Companies & Their Differences

There are quite a few publicly listed AdTech companies, each with different capabilities. Below is a list of some AdTech companies that are trading on a stock exchange.

The Trade Desk (NASDAQ:TTD)

The Trade Desk specializes in real-time programmatic advertising technologies. Their offering is designed to personalize digital content delivery to users. The technology primarily serves the demand side and is a DSP, Demand Side Platform. The technology provides a self-service solution that direct advertisers and agencies can use.

AcquityAds (TSX:AT)

AcuityAds is an advertising technology company that provides marketers with a one-stop solution for programmatic advertising. The technology primarily serves the demand side and is a DSP, Demand Side Platform. Their technology provides a self-service solution that direct advertisers and agencies can use.

Adcore (TSX:ADCO)

Adcore is a global digital advertising technology company providing Software-as-a-Service (SaaS) solutions for marketing via search engines and social media. Adcore offers a unique combination of AdTech with capabilities and features around campaign creation, campaign management, feed management, analysis, and reporting. Adcore’s AdTech is especially powerful in the creation, management, and analysis of search and social media campaigns for the e-commerce and travel industries.

Future & Opportunity of AdTech Companies

It is hard to predict the future of AdTech companies. With the upcoming deprecation of third-party cookie support and ever-increasing privacy concerns, it will be harder to track users and measure success. At the same time, the industry as a whole has proven to be inventive and finds different ways to come up with ways of creating, optimizing, and analyzing campaign success.

While the whole industry will evolve, there is a very high expectation that digital advertising media budgets will continue to grow over the next decades, and the opportunities for AdTech will grow with that. It is up to the AdTech companies to be agile and fast to adapt to the evolving industry and leverage these changes to create important value for investors that are looking to invest in AdTech.