Digital ad tech industry is booming

Recent deals

Content recommendation company $Outbrain(OB.US)$announced its IPO, ad verification company Inc. made its debut on the stock market and $Magnite(MGNI.US)$, a business focused on helping media companies sell ads, closed an acquisition of connected TV ad server SpringServe.

Ad- and marketing-tech companies including $Pubmatic(PUBM.US)$, $Viant Technology(DSP.US)$, $Applovin(APP.US)$and $DoubleVerify(DV.US)$have already completed public offerings in recent months. More recently, ad-tech firm Innovid Inc. announced plans to go public through a merger with a special-purpose acquisition company. And Outbrain competitor $Taboola Com(TBLA.US)$began trading earlier this week following a SPAC deal.

Advertising-technology company AdTheorent Inc. is nearing a combination with a special-purpose acquisition company to go public in a deal that would value the firm at about $1 billion, people familiar with the matter said this week.

Deals in ad tech and martech are growing in number following a lull during the pandemic, meanwhile, and were up 174% in the second quarter from the same period last year, according to a report released by Luma on Thursday.

Company bets

Media companies betting on streaming TV services to connect advertisers with cord-cutters have helped boost deal making. Last year, NBCUniversal parent company $Comcast(CMCSA.US)$ acquired Beeswax and $Roku Inc(ROKU.US)$this March agreed to purchase Nielsen’s advanced video ad unit.

Retailers are also entering the fray as they grow their digital commerce operations and compete with $Amazon(AMZN.US)$. $Walmart(WMT.US)$this year agreed from Thunder Industries, for example, while Amazon itself in 2019 bought Sizmek’s ad-targeting and automated ad creation technology.

U.S. digital advertising spending is expected to increase 25% this year to over $191 billion, according to a forecast from research firm eMarketer.

Stock performances

$Snap Inc(SNAP.US)$, $Twitter (Delisted)(TWTR.US)$, with ad business as the core source of their revenues, both posted better-than-expected financial results last week.

Snap reported quarterly earnings of 10 cents per share, which beat the consensus estimate by 11 cents. The company reported quarterly sales of $982.11 million, which beat the analyst consensus estimate of $844.98 million by 16%.

Twitter announced 74% year-over-year revenue growth to $1.19 billion in the second quarter, which beat the analyst consensus estimate of $1.06 billion by 12%. Twitter reported adjusted quarterly earnings of 20 cents per share, which beat the analyst consensus estimate by 13 cents.

After the reports, their share prices surged on earnings beats, with $Facebook Inc(FB.US)$, $Alphabet-C(GOOG.US)$, $Roku Inc(ROKU.US)$shares also trading higher.