Mar tech deal activity is also fueled by new players like management consultancies and technology companies entering the space with a long-term brand focus in mind.
In Q1 2016, IBM acquired Resource/Ammirati, an agency that focuses on brand experience and design. Deloitte, McKinsey, Accenture and PricewaterhouseCoopers have built out billion-dollar agencies, partly by acquiring creative shops that help them build long-term brand experiences.
“Advertising isn’t the point,” Geffs said. “The brand is the point. Advertising is one tool – and probably nowhere near the most important tool – in conveying that experience. They’re all moving toward, how do you design the experience of a brand and how do all the other pieces and parts, including advertising, support that?”
Mar tech also has a stronger business model: SaaS-based pricing keeps customers on board for the long haul, while ad tech is dependent on how much a client chooses to spend per month.
And with mar tech, ROI is directly observable – customers give their personal information in exchange for some type of reward, and the success of that relationship is measureable. In ad tech, fee transparency related to programmatic makes it difficult to understand what actually goes into a buy.
However, ad tech isn’t completely stagnant, as shown by the above numbers. And as the industry continues to chip away at issues like viewability and fraud, deal activity will rise in the space, Geffs said.
Petsky Prunier also saw a strong period for mar tech deals in 1H16, according to its M&A activity summary released Thursday. Deal activity value among mar tech companies reached $16.4 billion, up 88% from last year’s $11.2 billion, while digital advertising saw total deal value at $3.9 million, down from $5.17 million last year.