Independent mobile supply-side platforms (SSPs) are going extinct, the result of commoditization and natural evolution.
“It’s been really hard to be a single-point solution player in the ad tech space for a long time, but now it’s almost impossible,” said Christopher Hansen, chief product officer at IgnitionOne. “Just take a look at the Terry Kawaja [LUMAscape] slides. The space is complex, and consolidation is happening.”
In a sense, commoditization is part of an evolutionary process. As a technology categories loses its differentiation and the marauding me-too hordes move in, it’s time to “innovate, die or get acquired,” said Ed Chater, Adbrain’s GM for North America.
“We’re going to see a constant cycle of expansion followed by consolidation,” Chater said. “That’s typical of what you see in most markets, and the ad market is no different. Basically, every technology is a ticking time bomb until it gets commoditized.”
Mobile SSPs are an example that proves the rule. Supply-side companies with “mo” or “mob” in their name have been gobbled up at a steady clip for years.
Google snagged Admob, Twitter bought MoPub, Matomy Group acquired Mobfox, Rubicon snapped up Mobsmith, PubMatic got Mocean and Singtel scooped Amobee. Mobclix was even bought twice – first by Velti, and then by Axonix when Velti went out of business.
Rounding out the list is Millennial Media’s acquisition of Nexage, Opera Mediaworks’ purchase of AdMarvel, Fyber’s acquisition of Inneractive and, most recently, the June sale of Smaato to a Chinese offline marketing company called Spearhead Integrated Marketing Communications Group.
In a sense, it’s “just the natural development of the VC-funded space,” said Patrick Kollmann, CEO of mobile mediation platform AddApptr.
“We’re definitely at a point now where a lot of companies in the market have to make an exit,” Kollmann said. “They don’t necessarily see a crisis ahead, but money’s probably starting to get tight compared to a couple of years ago.”
Some of the consolidation in the mobile ad space comes from more desktop-focused companies looking for mobile programmatic chops, quickly. That means retrofitting their existing operations to help advertisers monetize mobile.
“The desktop guys underestimated the complexities of mobile-first thinking,” Chater said. “Multichannel brands want to optimize across mobile, desktop and offline, and they need to tie it all together for a single view of reality.”
Rubicon Project is a good example. Over the years, the company, which started life as a desktop-centric “yield optimizer” and supply-side platform, shapeshifted to keep pace with changing times. When mobile emerged, Rubicon bought Mobsmith. When the growing opportunity around intent marketing and retargeting presented itself, Rubicon bought itself some buy-side technology in the form of Chango, a Toronto-based DSP.
In other cases, mobile companies are either looking to shore up their mobile supply, as in the case of Millennial Media and Nexage, or become a one-stop-shop for app publishers, as evidenced by Berlin-based mobile ad platform Fyber’s recent acquisition spree.
Fyber bought German SSP and ad server Falk Realtime in mid-2015. In January, RNTS, Fyber’s parent company, acquired mobile ad network Heyzap. Less than three months later, it bought Inneractive.
At the time of the Heyzap acquisition, Fyber COO and co-founder Janis Zech told AdExchanger that RNTS’ aggressive M&A strategy was about “serving all sorts of different publishers with a single unified point of integration to service their various advertising needs.”
There’s a limit to the number of partners a publisher can have without losing its proverbial marbles, not to mention having to justify paying all those various middlemen.
“More isn’t better – it’s just more complicated and expensive.” said PubMatic president Kirk McDonald.
Vendor fatigue is going to set in for publishers, McDonald said.
“The reality is that publishers are looking for holistic ad-decisioning platforms to help them optimize and mediate, regardless of screen and format,” he said. “And eventually, the CFO department is going to come along and say, ‘We have 11 or 12 or 13 different partners – why do we work with so many vendors?’”
And then there’s the ever-present shadow that Facebook casts over all things mobile advertising. Facebook’s growing dominance is also helping speed up consolidation, Chater said.
“It’s hard for larger-scale independent mobile ad networks and exchanges to exist, which is why we’re simply seeing less and less of them,” he said.
But that doesn’t mean there isn’t a future for mobile pure-play companies. It’s simply a matter of staying ahead of the curve.
“Can you still be a mobile player in a niche area? Yes – the opportunity is still there, and the market is big enough,” said Dan Meehan, CEO and founder of PadSquad, a publisher-focused mobile monetization platform. “If you do one or two things well, you can still absolutely be valuable to publishers … but on the other hand, you’ll probably be scooped up by a huge technology company and jammed into a stack.”
So, while you probably won’t see new mobile SSPs entering the space, there are still a lot of mobile-related problems to solve.
“The party atmosphere is over – that’s for certain,” said AddApptr’s Kollmann. “But that doesn’t mean there won’t be more innovation. We’re seeing it happen all the time.”
