Friday, February 27, 2015

Startups Face Digital Advertising Squeeze

According to this Alleywatch news article, 2014 was a good year for digital media advertising startup consolidation as large players such as Facebook, AOL, and Yahoo in the business scooped up smaller rivals and startups through acquisitions. M&A activity in the digital media space rose 32 percent year on year from 2013 to 2014, with a net acquisition value from $2.3 B to $7.5 B, according to investment bank CoadyDiemar Partners. Also according to the same source, the number of deals has risen from 76 to 100.

The bigger media companies are purchasing smaller firms to reduce competition, gain market share, and build their own digital ad products, and typically claim to offer more comprehensive set of ad servicing vehicles and products than their smaller rivals. Startups, on the other hand, claim to be more agile and nimble than their bigger rivals, reports The Wall Street Journal.

According to the same article, the overall market for digital media ad spend remains one of the highest growth opportunities in advertising industry, with spending forecast to nearly double to $80 B from 2013 to 2017, according to Woodside Capital Partners.

CoadyDiemar also reported that as advertising becomes increasingly more prevalent, and as digital channels become more sophisticated and mature, further consolidation in the sector is likely to continue and increase both in terms of the number of deals as well as the overall transaction dollar amount.

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