Ad Tech Market Still Highly Fragmented Despite Intense M&A Activity

In spite of ongoing intense mergers and acquisitions activity, the advertising software market is still highly fragmented. According to a new market share report from IDC, the top 15 vendors represented less than 40% of the overall market in 2017 with a multitude of small, specialized vendors with limited revenue making up the rest.

Criteo was the top vendor in 2017 with a 7.4% share of revenues, followed by Google with 6.5% share. A little farther behind is MediaMath, with a 3.9% share, followed by Adobe (3.0%), AppNexus (2.9%), AdRoll (2.4%), and The Trade Desk (2.0%), after which begins the long tail. Advertising technology is also a market that is still rapidly growing and will continue to do so for the foreseeable future.

The overall market for advertising software grew at 38% year over year from $9.2 billion in 2016 to $12.7 billion in 2017. At these spending levels, advertising technology sales stood for 4.7% of total ad sales (2017), up from 4.0% (2016). IDC expect sthis share to grow to 7.8% by 2022 as the industry's push for advertising automation continues and the overall volume of spending on advertising continues.

The transition from traditional TV advertising to digital video advertising, specifically connected TV advertising, will be the one major driver of future growth. "The ad tech segment is still very fragmented," said Karsten Weide, program vice president, Media & Entertainment at IDC. "This means there is a lot of opportunity for acquisitions, but also for growth.