The video ad tech space is in an interesting place. On the one hand we’ve already seen quite a bit of M&A activity and in some respects the industry feels like it’s starting to mature. On the other, there are still a huge number of greenfield opportunities in video, whether you look at emerging devices, consumer behaviour, or pretty much any market around the world, all of which makes it feel like it’s still very early days. This puts the independent video ad tech companies in an interesting position, both in terms of their own growth and in terms of their value to potential acquirers. Here Irfon Watkins, CEO of Coull, discusses the state of play for independent ad tech companies today, the rise of walled gardens and the differences between the various sell-side platforms.
Is being independent from the media side of the industry (also known as being ‘media agnostic’) an advantage in 2016, or are the rise of walled gardens like Facebook, Snapchat and YouTube a threat to ad tech companies who operate independently?
Our strategy is to build a quality, brand safe product for the open web. Walled garden inventory is a different product from ours, ultimately though if you offer the same quality of inventory outside the walls, the added data transparency and lower cost of user acquisition will win out. The investments we are making in viewability and brand protection mean that we can compete. The cycle of walled gardens and their ultimate collapse will repeat itself. In the 80’s the tech mantra was ‘no one gets fired for buying IBM’. In the 90’s you would have been fired if you still lived by that.
We’ve seen a spate of video ad tech companies raising money over the last few weeks. Firstly, where are the opportunities in video advertising emerging? And secondly, what type of companies are likely to be acquiring video ad tech companies in the coming years?
We are seeing a shake out within our industry as companies attempt to move to profitability. This has resulted in strategies becoming more polarized, ad tech companies choosing to create products to help companies build garden walls and others such as Coull building products to knock those walls down. There are of course opportunities in both strategies but you do need to decide which side of the wall you are on.
We believe that media owners will continue to make strategic investment or acquisitions within ad tech. They will want to learn more about the space and how they can protect margin and data exemplified by the recent investment in Dataxu by Sky.
The IPO opportunity is not there right now and we do not see that changing during 2016. This in turn will drive down valuations and increase the pace of M&A.
How does Coull differentiate itself in a crowded marketplace?
We don’t see a crowded marketplace. Independent proprietary video platforms are not commonplace. As LiveRail, Spotx, Adap.tv and Brightroll morph into the businesses that their parent companies desire, the reality is that there are very few platforms available to the open web and mobile inventory that we look for.
We have built a next generation platform built to deliver fast decisioning and with brand safety and viewability designed into the architecture, not bolted on as a lot of older platforms have had to do. Reducing latency within the ad tech decisioning stack will help deliver a true RTB Programmatic ecosystem whilst delivering a better user experience for the consumer.
Do you have plans to expand into programmatic TV?
No, it’s not a focus for us right now as we believe delivering a true programmatic TV experience is a different business that requires a lot of focus. Too many ad tech companies are trying to become generalists. Our industry is still in its infancy, we need specialists. Coull is a video specialist.