Article written by Origin Co-Founder Stephen Strong and featured in Advertising Week,
Let’s get one thing clear: Connected television (CTV) is TV. It is the same experience happening on the same screen in the same room. Seriously – the reach is now there and advertising spend on CTV is on track to reach $13.4 billion by the end of this year. As it grows in popularity, brands and advertisers want a piece of the action, which in turn is leading to an explosion in competition by those who want a piece of this ‘new’, multi-billion dollar cake. When competition increases and companies of all shapes and sizes begin to saturate the market, a trend can sometimes emerge where smaller companies shift their focus towards differentiation and larger companies, as a result, set their sights on mergers and acquisitions (M&A) to enhance their offerings and increase their market share in a rapidly evolving industry.
According to Luma’s Q3 report, deal activity rose +104% on a YoY basis, as acquirers continue to be significantly more active in comparison to the mid-2020 “pause” and that has only grown as more consumers turned to streaming. With this trend showing no signs of slowing down anytime soon, industry leaders are now asking themselves: what does this rapid increase in M&As mean for CTV advertising? And, how will it influence key decision makers within the industry who oversee areas such as innovation and competition?
While early signs are pointing to a number of benefits for the industry, the real impact of M&As in CTV remains largely speculative. With that in mind, here are just a few of the outcomes industry leaders should take into consideration.
Expanding Accessibility and Adoption
One of the biggest impacts M&As are having on the CTV industry is that it is making inventory and the CTV advertising ecosystem more accessible to larger industry players. To date, the CTV industry has been notoriously hostile and difficult for new market entrants both large and small to break into. As such, companies have had to find creative ways to gain entry into the space and for most this includes adopting a comprehensive M&A strategy.
Through thoughtful mergers and buyouts of key players in the space, a number of companies are able to position themselves to not just climb the walled garden that is CTV but bring it down completely. So far, we’ve seen this strategy prove extremely successful for companies including VideoByte, Telaria and Rubicon Project, and Comcast as they look to make their first foray into the space. Take the recent news of Microsoft acquiring Xandr from AT&T. There needs to be consolidation to survive in CTV. Looking at Microsoft’s assets, this deal will presumably yield them significant cost efficiencies around both placing media and running paid media both on their own platforms and elsewhere.
Most mergers and acquisitions in the industry result in the parent company gaining the ability to create a more seamless CTV experience for advertisers, sometimes going so far as to allow buyers to purchase and deploy their ads all in one place. As the industry becomes more accessible for ad tech players and other vendors and inventory becomes more appealing there will be increased adoption of the platform among advertisers and brands.
M&As often get a bad reputation. When people hear about companies merging or being acquired, they immediately think consolidation which is oftentimes linked to “downsizing” or “restructuring” – better known as people losing their jobs. But that isn’t necessarily true. M&As actually offer significant benefits to all parties involved as well as the industry at large.
M&As are unique in that they both promote and eliminate competition. While consolidation of the industry reduces the number of players participating in the CTV landscape, it also gives those companies a stronger competitive edge by joining teams, budgets, technology and, as an extension, amplifying creativity across the board.
CTV is fast growing and has massive untapped potential. The industry’s recent M&A activity has allowed companies to begin to explore how they can fully harness its capabilities thanks to an infusion of both talent and capital. While new technology and larger budgets are key to moving innovation forward, more diverse skill sets across teams and a spirit of cross-collaboration are enabling these companies to lead the charge in pushing the boundaries of what will be possible with CTV in the future.
Moving forward, the increased consolidation of the industry will be a means to expand CTV capabilities and offerings to enable further reach and scale.
As the CTV industry becomes less crowded and more competitive, innovation will be the key to survival. Companies must look outside-the-box to come up with new ways to engage audiences and fight for valuable ad inventory.
As such, we are also seeing a trend of industry players looking to M&As as a tool for fueling innovation in CTV. These strategic mergers and buyouts open up a variety of doors for companies. Similar to a wave pulling back from the shore and crashing back down with newfound force, consolidation in CTV presents an opportunity for industry leaders to unearth new ideas, clear a path for continued building, and strive for new heights of innovation.
The increased M&A activity within CTV will allow companies to differentiate themselves from competitors by diversifying their capabilities quickly and at scale in a rapidly changing CTV landscape. To successfully harness this strategy, companies will need to prioritize introspection, assessing their business for weaknesses holding it back from innovation and finding complementary companies that fill in those gaps with new technology and new thinkers.
What does this all mean for the CTV industry?
As the CTV industry grew in popularity among consumers over the last two years, marketers were forced to adapt quickly and incorporate CTV into their strategies. As a result, gaps emerged in marketers strategies and they were not leveraging the full potential of CTV. M&As can help fill those gaps.
M&As have led to great opportunities for the industry including increased innovation, accessibility and competition within the industry. These opportunities are leading the industry to become one of the most sought-after marketplaces. We will only continue to see the popularity of the CTV advertising ecosystem grow and M&As become even more popular as industry leaders look for new ways to differentiate themselves.
Read the original article here.
Origin is a pioneering media and technology company whose first to market creative advertising solutions are reshaping the way brands engage and activate consumers on Connected TV.
The architects of ‘Native CTV’, Origin fuses in-house video production with proprietary ad serving technology to create highly engaging native content that is engineered to capture the attention of a room during an ad break and enhance the connection a viewer feels towards a particular brand.
Origin was founded by media veterans Fred Godfrey and Stephen Strong whose careers have been shaped by their relentless commitment to enraging the status quo. Learn more at www.originmedia.tv.
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