Despite a challenging quarter in the public markets, the Digital Media and Marketing ecosystem showed continued strength in M&A and private financings. While other industries experienced a “post-honeymoon” quarter after a string of new, macro challenges, Digital Media and Marketing grew M&A throughout the quarter. Total M&A count was robust, experiencing 24% YoY growth since Q1 2021, with Digital Content the clear victor seeing more than 50% growth since last year. Deal activity fell short in scaled transactions (>$100mm), down nearly a third from the previous quarter (23 vs. 33).
Contrary to the M&A activity, Public Equity Markets have seen a significant reduction in activity with no companies in the sectors going public or issuing a secondary offering during the quarter. This comes after a record year that saw 18 AdTech / MarTech issuances. An array of exogenous challenges such as staggering inflation and the Russian invasion of Ukraine have created wide-spread uncertainty and resulted in a sharp decline in financial markets — with the broader market seeing the largest declines since the start of the COVID pandemic. While a handful of companies are rumored to go public in 2022, only three have filed or are pending issuance as of quarter-end.
As we’ve done over the last few quarters, we continue to highlight detailed public analysis of the Ad Tech and MarTech sectors through The LUMA Indices, LUMA.A and LUMA.M. Included in this report is a benchmarking analysis of all 26 companies in each Index; four of which overlap the indices.
Neither the LUMA.A Index nor the LUMA.M Index were immune to the public market turbulence. Both saw sharper declines in the last 3 months than did the NASDAQ 100 (-17% and -25%, respectively vs. -9%). Despite this, the Indices remain well above their pre-pandemic levels.
Key Q1 Takeaways
- Digital Media and Marketing managed strong deal activity in this quarter whereas a handful of other sectors experienced a “post-honeymoon” period.
- In the public markets, both Ad Tech and MarTech saw meaningful declines in Enterprise Values and valuation multiples – driven largely by exogenous factors such as inflation and geopolitical tensions.
- Scaled deal activity (>$100mm) saw a sharp decline QoQ in all three sub-sectors, with AdTech experiencing the largest contraction of 50%.
- Growth Equity / Late-Stage VC investors continued to play a pivotal role in providing large rounds of financings for more mature companies in the sub-sectors on their road to becoming public.