Overview
2021 was yet another active year in the Digital Media and Marketing ecosystem. Between M&A, public market, and private financing activity, 2021 reflects a banner year for the ecosystem in many respects.
We continue to observe notable trends driving investment and deal activity, best highlighted by “LUMA’s M&A Themes.” Our six themes – CTV, Mobile App, Data & Identity, Commerce Media, Audio, and “End-game Programmatic Consolidation” – have accounted for a disproportionate amount of M&A activity. Of these, CTV and Mobile App remain the hottest deal themes, as billions of dollars continue to flow into these two rapid-growth sub-sectors.
The hot IPO market observed in 2020 got even hotter in 2021 – a staggering 18 companies in our ecosystem went public this year (including 4 companies going public via SPAC). This represents an incredible 62% increase to the number of public companies in the Digital Media and Marketing ecosystem. Recognizing the dramatic shift to the public markets taking place this year, we launched a formal market performance tracking initiative “The LUMA Indices” through which we observe how balanced / diversified portfolios of Ad Tech and MarTech stocks would have performed over the last several years. The results are staggering – our Ad Tech index (“LUMA.A”) is up 972% in the last five years (since Jan ’17), and our MarTech index (“LUMA.M”) is up 395% over the same period.
Finally, private financing activity has remained robust. More than ever, private investors have become comfortable with multi-billion-dollar private valuations, as evidenced by increasing check sizes across Ad Tech, MarTech, and Digital Content fundraises. Further, we observe incredible diversity in investor type – from traditional VC, to Private Equity, to Sovereign Wealth Funds and more, all sorts of investors are deploying dry powder toward the ecosystem at an incredible pace.
Key 2021 Takeaways
• 2021 was an emphatic rebound year from the 2020 pandemic-induced lows for M&A in the Media and Marketing Technology sectors, with total deal-making up +82% year-over-year.
• Ad Tech and MarTech saw 18 new entrants in the public markets this year. This year, LUMA.A was up +2% while LUMA.M was down (8%). However, both Ad Tech and MarTech are still significantly higher from the beginning of 2020 with +262% and +73% two-year increases, respectively.
• Growth Equity / Late-Stage VC investors continued to invest significant amounts of capital into companies Pre-IPO looking to capitalize on the gap between private market and public market valuations.
• We expect elevated M&A activity to continue in 2022 as strategic and financial buyers look to capitalize on the evolving ecosystem by acquiring capabilities catering to permanent changes in consumer behavior that are downstream from the pandemic (e.g., streaming and gaming gains, increased eCommerce sales, and general software adoption).
The LUMA Indices Highlights
• In Q2’21, LUMA launched The LUMA IndicesBETA to track the performance of public companies in the Ad Tech and MarTech ecosystems
• This quarter, four new companies completed their public issuances: Innovid (Ad Tech), AdTheorent (Ad Tech), Braze (MarTech), and Coveo (MarTech). These companies will be incorporated in the indices’ next semiannual rebalancing (at the end of 2021).
• Additionally, LUMA has made retroactive additions to both indices. Zeta Global has now also been added to LUMA.M and now is part of both the LUMA.A and LUMA.M indices. ZenDesk, provider of customer service / CX software, has been added to the LUMA.M index.
