After a number of wilderness years and some notable implosions, ad tech is back in favor with public investors but not every CEO in the space should be in a rush to join the herd, according to industry leaders.
Investment bank LUMA Partners notes how there are more than 20 ad tech companies listed on the public markets, a stark contrast to just two years ago when the number of such companies was in the single digits.
All of this has been buoyed by brands doubling down on their digital media spending, outstanding success stories — just look at how The Trade Desk’s market capitalization (about $40 billion) is more than double that of PG, Publicis Group, and WPP — not to mention special purpose acquisition companies (SPACs).
However, everything is cyclical and not everyone should be in a rush to jump on the gravy train, according to Michael Barrett, CEO of publicly-traded SPP Magnite. He imparted his opinion when participating in a panel session at Industry Preview, a conference hosted by AdExchanger earlier this week.
Quizzed on what advice he would give fellow CEOs eager to list publicly, he said, “If you don’t absolutely need the money, wait… too many [ad tech companies] went out last year, and that’s not a pejorative statement, they can all be wonderful companies.”
Panel moderator Terence Kawaja, CEO of LUMA Partners, noted how there is speculation that up to eight companies in the sector are mulling a debut on the public market in the coming months. This prompted Barrett to further clarify his position, “Just from a dynamic standpoint, the amount of money a Fidelity can invest in ad tech… they don’t need another eight choices, so my advice would be if you don’t need the capital right now, wait.”
Fellow panelist Mark Zagorski, CEO of DoubleVerify, a content verification outfit that debuted on the NYSE in April 2021, similarly advised caution. “If you’re shooting for a window, that’s not what you should be shooting for,” he said. “You should be shooting for getting behind your company, and just getting it into the right place to go public, period, because good companies can get out at any time.”
Also participating in the discussion was Lisa Utzschneider, CEO of Integral Ad Science, a measurement company that was listed on the Nasdaq in June 2021, who similarly advised clarity of purpose over speed to market. She added, “Having a clear, defined vision, and solid plan [is needed] and again, don’t rush.”
On Feb. 23, Magnite reported revenues of $161 million for the fourth quarter of 2021, representing an increase of 97% year-on-year, an uptick driven by the company’s pursuit of the fast-emerging CTV market which now contributes to more than 40% of its revenue.
Meanwhile, Integral Ad Science and DoubleVerify are scheduled to announce their earnings for the same period on March 3 and March 8, respectively.
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