Chris Cunningham’s Post

#AdTech M&A is heating up, but is it sustainable? While deal activity is climbing, the market's shifted from the frenzy of 2021. Companies like Integral Ad Science, Taboola, Outbrain, and AppLovin are caught in this evolving landscape, seeking strategic moves to strengthen their positions. But let's be real - is consolidation the only path forward? Or are there hidden opportunities for #innovation amidst the noise? I'm curious to hear your thoughts on the future of AdTech M&A. Is it a necessary evil, or a catalyst for growth?

AdTech M&A in 2024 Nice article from Catherine Perloff on the M&A trends within AdTech. Three things to think about: 1. Increased activity, adjusted valuations: Transaction volume nearly doubled, yet prices reflect current market realities. 2. Strategic portfolio optimisation: Firms pursue targeted acquisitions whilst divesting non-core assets swiftly. 3. Shifting buyer landscape: Fewer private equity and tech giant purchasers; AdTech firms lead consolidation efforts. Link to article: https://lnkd.in/enQ9KGAy **** Enjoy this and work in Advertising? Follow Rishan Chopra for more.

Someone said that I was on a quest to be on every cap table in the industry. It is true that I have found my way on to a few but have never had any that have exited. Not super focused on it; It is a bad way to live. In the past, I have worried a lot about when this or that company was going to exit. But I now try really hard to be all "one-day-at-a-time" and "accept the things you cannot change" about the various equity pieces. I have a lot of sleepless nights, and it is a regret of mine. At one point, I gave myself a panic attack and had to consciously shift my thinking. Cautionary tale. Moving on. When starting companies, I have been part of teams where we wanted to build something that we thought clients would very much want, was hard to replicate by large companies in the space and required extreme domain expertise. Neither of the tech companies that I helped found were "built-to-sell" as their primary focus. They are technology/product companies where there are real assets that would be hard for someone to duplicate. However, I have observed that if your company survives in AdTech, you have a strong technology, and you are not too big (a very experienced founder told me sub-300MM in valuation), you likely get bought; otherwise, you have to take the leap and go public. I think this dynamic is part of Aperiam's success. They have a higher probability of exits, but at more modest valuations. I think this is a very smart model. Not zero to one, but zero to .6., but they have had some power law type exits. Let's see if anyone from there corrects me. I can think of a few cases where companies have not sold or gone public, and the founders are operating solid companies. And that is why you don't build to sell. You could be operating the company for a while and you don't want to get burned out and angry that you are stuck with something that is worth a lot but can't exit. Regardless, I would be up for an M&A surge.

We spoke with Sifted about why #mediacapital investments are on the rise. Here’s my take on the factors driving deal growth this year and into 2025: 📈 Venture capital rebound and falling interest rates: Lower rates are fueling a return in ad spend. 💸 Legacy media adapting: Media capital deals offer legacy outlets a way to diversify cash flow and attract digital advertisers amid Big Tech competition. 📺 Accessible TV for early-stage brands: Media capital has made TV more affordable, lowering barriers and expanding video ad opportunities, especially for tech startups. 👀 This trend is also driving category creation, attracting new sectors to invest in TV. 🇬🇧 Digital startups now represent 20% of TV ad spend (£1.5 billion annually). 🇺🇸 US is catching up! Leading broadcasters are dedicating 3-5% of annual revenue to media-for-equity deals. Amelie Bahr | GMPVC German Media Pool | Vinay | Channel 4 Ventures | Sheena, Callum | ITV AdVentures | Caspar Lee Creator Ventures #mediaforgrowth

"Media M&A's New Recipe for Success: 1-Part Private Buyer + 2-Parts Seller Success" - read my latest Fearless Media newsletter that's out now. Here's an excerpt: Unforgiving public markets, industry disrupting streaming headwinds, and now newly transforming generative AI -- what’s a traditional media and entertainment company to do? Explore strategic alternatives, of course, which frequently means, “sell!” And, as I predicted last year, sell they did (or are doing), at a pace we haven’t seen in the industry for quite some time. Fortunately for many sellers, despite all these daunting downward pressures, they benefit from the upside of the scarcity that flows from being amongst the handful of remaining storied entertainment brands or companies that boast deep pools of precious IP (including prized franchise assets). Scarcity pumps up seller financial outcomes, even in today’s period of much industry doom and gloom. I predicted that the M&A fuse would be “lit” this year. At the end of last year, I proclaimed that “The M&A fuse will be lit and spark more consolidation” in 2024 – and given recent M&A activity – I think it’s fair to say that I got this right (at least for now). Just in the past few days, private equity firm Silver Lake agreed to take long-time entertainment player to WME | William Morris Endeavor private, and Skydance Media cemented a 30-day exclusivity period to become Paramount’s M&A private dancer. Notice a pattern here? Nowhere is there a peep from any potential Big Tech or public media company buyer. Welcome to a new and very different period of entertainment industry consolidation. Now it’s all about privately held stashes of cash. READ THE REST IN MY NEWSLETTER (and subscribe to my separate generative AI-focused media & entertainment newsletter called "the brAIn" on Substack. https://lnkd.in/gni4-7_M #media #entertainment #hollywood #movies #film #streaming #mergersandacquisitions

It's interesting to see emerging sports companies make acquisitions... 𝗝𝘂𝘀𝘁 𝗹𝗮𝘀𝘁 𝘄𝗲𝗲𝗸, 𝘄𝗲 𝘀𝗮𝘄 𝘁𝗵𝗲 𝗳𝗼𝗹𝗹𝗼𝘄𝗶𝗻𝗴: 📝 Sportable 𝘢𝘤𝘲𝘶𝘪𝘳𝘦𝘥 a computer vision and sports graphics company, Intaneous, to build on top of their smart balls. 📝 PlayersTV 𝘢𝘤𝘲𝘶𝘪𝘳𝘦𝘥 ad tech distributor Cloud Media Center for their athlete-driven media company. 📝 Spiideo 𝘢𝘤𝘲𝘶𝘪𝘳𝘦𝘥 Signality, a computer vision company, to integrate into their automated video solutions. ───────── 𝗛𝗲𝗿𝗲'𝘀 𝘄𝗵𝘆 𝗜 𝘁𝗵𝗶𝗻𝗸 𝘄𝗲'𝗹𝗹 𝗰𝗼𝗻𝘁𝗶𝗻𝘂𝗲 𝘁𝗼 𝘀𝗲𝗲 𝗺𝗼𝗿𝗲 𝗮𝗰𝗾𝘂𝗶𝘀𝗶𝘁𝗶𝗼𝗻𝘀 𝗹𝗶𝗸𝗲 𝘁𝗵𝗶𝘀: ❶  Emerging companies will use acquisitions to fast-track their capabilities by integrating cutting-edge tech, AI especially, instead of building in-house. ❷ More investment is pouring into sports, enabling well-capitalized startups (like Sportable, $20m raised) to acquire competitors or complementary solutions. Most importantly... Speed is the name of the game!

Scoop: Quite a few strange things have happened in 2024 so far, but I didn't have this potential adtech tie-up on my bingo card. I'm hearing Outbrain has emerged as a frontrunner to acquire, merge, or otherwise invest in Altice's video-focused adtech company Teads. Altice has been looking to divest assets to pare down its substantial debt pile. Read more at Business Insider https://lnkd.in/e92gVmVN #outbrain #altice #teads #adtech

When I first heard that WME was going private again, my immediate reaction was that it was a move to dissociate themselves from TKO, a red-hot pure-play sports and entertainment company. As a former agent, my sentiment has been that the agency business is in decline for many reasons—some being (1) talents such as influencers and actors do not need agents as social media and easy access to contact information for talent disintermediate agents; (2) generous back-end deals and packaging deals are remnants of the past; and (3) the 10% fee model does not make much sense when there is more content, more opportunities, and less money—in other words, the pie is bigger, but the slices are smaller. Moreover, with the upcoming AI storm, the consensus is thought to be that there will be less work for talent. However, the more I think about this position, I realize my gut reaction is wrong. I actually think WME went private because Wall Street does not understand the business, and the future is extremely bright for WME. As an owner in a sports media company, I am all in on live sports content, and WME negotiates some of the largest deals in sports, such as the $920 million, eight-year deal between the NCAA and ESPN earlier this year, or the $5 billion, 10-year WWE Raw-Netflix tie-up. That part of the business will only grow. Also, I am definitely walking back my thoughts on the importance of big-name talent—the Marvel movies made us feel that the IP was larger than the talent, but content on Disney Plus and HBO Max has shown that stars still matter, with the better-performing content featuring stars we love and recognize. "Oppenheimer," "Dune," and "Barbie" all proved that stars matter, and there has been a flurry of first-look deals for A-listers in the past few weeks. And finally, although AI may bring down production costs, I firmly believe we want to see actual humans act, and like in the music industry, we do not want to listen to AI versions of Drake and The Weeknd. In fact, I believe AI will increase the business, and we will have more content, more stars, and agencies may see an uptick in the traditional talent representation revenue business. My final verdict, echoed by many experts, is that Wall Street doesn’t understand WME. But with the company owning 51% of TKO, being a massive player in sports rights negotiations, and representing the best talent in the world, the future is extremely bright for Ari and Patrick, who are the best in the world at what they do! https://lnkd.in/gJ-YmA2D

After years of experience in the AdTech sector, including launching a CTV product, I completely understand the dynamics at play: 1. Major players like Meta, Google, and Amazon dominate the market, capturing the majority of advertising dollars. 2. There's still a sizable secondary market, but agencies are increasingly reallocating funds towards programmatic platforms. 3. The "Ad Tax" significantly impacts the viability of smaller AdTech firms, often making it difficult for them to sustain operations. 4. Companies often struggle to evolve; they might develop one successful product, assemble a modest sales team, but then cycle back to downsizing and relying on programmatic revenue from the open marketplace after initial attempts don't sustain growth.