Q2 2021 Market Report

OVERVIEW
During Q2 2021, the Digital Media and Marketing ecosystem continued to exhibit significant momentum in deal making. M&A surged within Ad Tech, MarTech, and Digital Content, with massive year-over-year increases from the pandemic-induced nadir of Q2 2020.

In both Ad Tech and MarTech, deal counts grew by more than 200% year-over-year. More broadly, scaled deal activity remained abundant this quarter, with 28 deals transacting at values greater than $100 million, and twelve deals greater than $1 billion dollars. Among scaled deals, Digital Content was the most active, with the sub-sector representing eight out of the twelve $1 billion-plus transactions that occurred this quarter.

In public equity markets, the robust pipeline of Ad Tech and MarTech issuers continued to produce new public companies – despite significant deceleration in SPAC capital raising – as valuation multiples for the sub-sectors remain near all-time highs. Ad Tech saw five companies complete their IPO or de-SPAC transaction this quarter: AppLovin, DoubleVerify, Integral Ad Science, ironSource, and Taboola all had trading debuts. Meanwhile, MarTech companies Sprinklr, SquareSpace, and Zeta also began trading in the public markets in Q2.

This flurry of activity took place amid a quarter with a well-publicized sell-off in tech (continuing from Q1’s similar sell-off). Fears of sustained inflation weighed on growth stocks – and the tech sector in particular – leading to a general market decline among companies in the sector in late-April / mid-May. However, there has since been a recovery across all our coverage sub-sectors, with almost all “Tech” sub-sectors in our coverage universe finishing Q2 up on the year so far (with the lone exception being Ad Tech, down 9% YTD).

INTRODUCING: The LUMA Indices

In addition to our usual quarterly analyses contained in the Market Report, LUMA is introducing two indices to track public companies in the Advertising Technology (LUMA.A) and Marketing Technology (LUMA.M) sectors. Given the proliferation of public companies, we felt the time was appropriate to bring some cohesion to an increasingly fragmented public cohort. The indices should be considered in “beta” for the next quarter as we refine our methodology and benchmarking based on further analysis and market feedback.

The LUMA Indices

Click Here to Access The LUMA Indices

KEY TAKEAWAYS
• Continually strengthening deal activity coming out of last year’s COVID-induced lull; Q2 even stronger than the very robust Q1
• Notable private equity activity, highlighted by Apollo’s $5 billion acquisition of Verizon Media, and Blackstone’s investment in Simpli.fi and acquisition of IDG
• Significant activity in the mobile app advertising ecosystem, with Skillz acquiring Aarki; Vungle acquiring TreSensa and JetFuel; and Zynga acquiring Chartboost
• Digital Content M&A was particularly active, headlined by two CTV mega deals: Amazon’s $8.5 billion acquisition of MGM, and Discovery’s acquisition of Warner Media from AT&T for $43 billion
• Eight companies entered the public markets this quarter across Ad Tech (AppLovin, DoubleVerify, Integral Ad Science, ironSource, and Taboola) and MarTech (Sprinklr, SquareSpace, and Zeta)
• Overall, public valuations for most sub-sectors covered by LUMA are up on the year; the lone exception is Ad Tech (-9% YTD), which has weathered both industry-specific dynamics (e.g., Google and Apple privacy-related changes), as well as the tech-wide sell-off of April / May
• Due to the recent proliferation of publicly traded companies in our coverage universe, LUMA is launching two new market tracking initiatives, LUMA.A and LUMA.M, respectively tracking the publicly traded companies in Ad Tech and MarTech

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