Home Investment JEGI: 2019 M&A Could Shift To The Mid-Market

JEGI: 2019 M&A Could Shift To The Mid-Market

SHARE:

JEGI Co-President Tolman Geffs will speak at AdExchanger’s upcoming Industry Preview conference on Jan. 23-24, 2019 at the Grand Hyatt New York.

“There’s been a hell of a pullback investing in anything that remotely smells like ad tech,” according to Tolman Geffs, co-president of investment bank Jordan, Edmiston Group Inc.

But that’s not as dire as it sounds. Investors haven’t soured on investing in the space completely, they’re just being far more circumspect – and that’s not a bad thing, Geffs said.

“High-quality companies, and I’m using that phrase loosely, doing something that’s economically sensible that are data rights owners, have a clear chain of consumer consent and provide a benefit to consumers – those companies will continue to do well,” he said.

AdExchanger caught up with Geffs for his hot takes on investment trends.

AdExchanger: Back in December 2016, you told AdExchanger that “good business in ad tech will find owners.” Is that still the case?

TOLMAN GEFFS: Wait – I’m being held accountable for a prediction? But the answer is still yes. However, a “good business” has to cover two things. One, the business needs sustainable margins, not just arbitrage or dependence on the sheer intellectual talent of a few folks. There has to be an engine that delivers value and extracts a fair rent for that.”

Second, there should be some benefit to whoever’s data is being used and a clear consent chain. You have an awful lot of companies that are running a good business in the sense of profitability and growth, and they’re not doing anything specifically wrong from a data perspective, but it’s just not clear there’s a lot of long-term benefit to the consumer or that the consumer has given truly informed, explicit consent.

Has the renewed focus on privacy and data collection chilled investment and M&A activity in the ad tech space?

Early-stage seed and first-round funding has inevitably slowed, but so has growth capital in particular for these companies. There will continue to be a pause until the regulatory framework becomes clearer or, at least, we’ll see a greater deal of discretion and selection.

JEGI advised on the MediaMonks/S4 deal. Is Martin Sorrell building the holding company of the future and if that’s the case, what does that mean for the holding companies of the present?

The holding companies of the present are trying to move from being agency holding companies to being agencies. WPP has been explicit about this. The holding company pendulum will swing back toward a more integrated offering.

Sir Martin would not describe what he’s building as a holding company, but rather a platform of companies that will work well together and move toward delivering what the market needs faster, better, cheaper – and it has to be all three of those things.

There were some really big deals this year: AppNexus went to AT&T’s Xandr, Adobe bought Marketo and IPG got Acxiom Marketing Solutions, to name a few. Can we expect more mega deals in 2019 and where will we see them?

I think we can and one area we’ll see them in particular is mar tech for smaller businesses. Mar tech for the enterprise has been coming along nicely, but the most economic activity comes from small businesses, and technology for those guys is going to be an increasing area of interest.

What types of technologies are CMOs clamoring for?

First and foremost, it’s companies assisting in the digital transformation of the customer experience. The whole experience is getting digitized and advertising is just a small piece of that – and not the most important piece. Now it’s not, “Gee, let me build a website,” it’s the digitization of the entire awareness, qualification, intent, purchase, consumption, satisfaction and repurpose cycle.

Technologies that enable large enterprises to do that are in a good position.

Must Read

Omnicom Investors Cheer IPG Sell-Off, Despite Weak Ad Spend In Q2

Omnicom is halfway through a major sell-off of IPG agencies. Its future looks healthier as it prunes lower-growth firms, including eliminating certain specialist firms and overlapping agencies in certain countries.

Hundreds of emails, depositions and other documents have been unsealed in the lead-up to the Google antitrust trial, providing a fascinating look at how Google talked about its own products when no one else was watching – especially tools to counteract the rise of header bidding.

Why PubMatic Ditched Its Prebid Web Wrapper, But Never Its SDK

Earlier this month, PubMatic shelved its Prebid integration wrapper, known as OpenWrap Web, and announced it would begin recommending Playwire as an offloading-onboarding partner for the 250-odd publishers that use its wrapper.

Gareth Glaser, Co-Founder & CEO, Gamera

Google’s Buyer Direct Could Beat Agentic Ad Tech At Its Own Game

Agentic AI shows promise for direct deals. But if Google has its way, Buyer Direct could put an end to all sorts of agentic direct sales opportunities while they’re still in the cradle.

Privacy! Commerce! Connected TV! Read all about it. Subscribe to AdExchanger Newsletters

How Warner Bros. Discovery Is Creating Value Out Of Dead Air With Pause Ads

Streaming publishers are banking on pause ads to bolster revenue with a more user-friendly ad experience. With programmatic standardization still pending, Warner Bros. Discovery is taking a stab at advancing the capabilities behind its own pause ad formats.

Peacock Hits Profitability As Comcast Prepares To Spin Off NBCU

Peacock hit what Comcast Co-CEO Mike Cavanagh called “meaningful profitability” for the first time in Q2, just as Comcast decided to let it leave the nest. 

Comic: It's Coming For You

Programmatic Platforms Champion Transparency, But Not If It Means Giving Activists Access

A DSP refused to give ad industry watchdog Check My Ads a seat on its platform, even after both parties cosigned a master service agreement, citing concerns about “protections” for “vendor and supply partners.”