The Rundown: Q1 dealmaking cools across ad tech and martech as AI remains the hottest ticket

Both of these deals were confirmed just a week after MiQ revealed two separate M&A moves in successive months, with the corporate development lead at the programmatic trading specialist, Paul Silver, describing current market conditions as a “buyer’s market,” to Digiday.     

That sentiment holds true in the latest quarterly earnings report from the sector’s best-known investment bank, LUMA Partners, which notes that deal-making across the digital media and marketing technology sectors slowed materially in Q1 2026. 

The comparative lag in deal activity was attributed to macroeconomic uncertainty and geopolitical tensions, which weighed on both strategic activity and investor sentiment, although the investment bank expects such activity to “normalize” when geopolitical turmoil assuages. 

“In the interim, we anticipate strategics to remain active, selectively pursuing opportunities to build differentiated capabilities, expand into key growth channels and focus on AI-driven outcomes,” reads the report, which was published earlier this week.  

LUMA Partners found that after a relatively strong finish to 2025, total M&A volume declined 11% year over year to 103 transactions, with larger, scaled deals (over $100 million) falling 30%.

The pullback was uneven across sectors, although ad tech proved comparatively resilient on a deal-count basis, ticking up slightly year over year, but activity at the higher end of the market collapsed, with just one scaled transaction vs. six a year prior. 

Meanwhile, martech saw broader contraction, with deal volume down 14% and scaled deals down 60%, during the surveyed period, reflecting tighter capital conditions and more selective buyers. 

Digital content, meanwhile, recorded the steepest drop in overall deal volume (down 16%), but stood out for an increase in large-scale consolidation, including blockbuster transactions such as Paramount’s $110 billion acquisition of Warner Bros. Discovery.

The activity points to a clear strategic throughline: buyers are prioritizing differentiated capabilities, particularly in AI, data and measurement. In ad tech and martech alike, acquisitions centered on incrementality measurement, identity resolution and AI-driven performance optimization. At the same time, content and platform players are pursuing scale and vertical integration, underscoring the continued importance of owned IP and distribution in a fragmented media landscape.

Public markets mirrored this caution. The LUMA ad tech and MarTech indices fell 21% and 27%, respectively, in Q1 – significantly underperforming the Nasdaq’s 7% decline – despite broadly solid Q4 earnings that met or exceeded expectations. The disconnect highlights persistent concerns about forward growth, valuation compression and sector-specific volatility.

Against this backdrop, private capital remains concentrated in AI. Large funding rounds, including OpenAI’s $122 billion raise and Runway’s $315 million Series E, reinforce that while traditional dealmaking has cooled, investor appetite for AI-driven platforms continues to reshape the competitive landscape.