It is Day 1 of 2022, and we have a lot to look forward to 🤞.

Last year, I had a hands-on, behind-the-scenes look at the ad tech and operations stacks of approximately 20 global brands. Most of them are Fortune brands…3 of them are in the Top 10.  Consequently, December is when every industry publication and investment firm starts reaching out for next year’s “predictions.”

Coming up with exhaustive lists of predictions is…well…exhausting.

Instead, I’ve been offering a single prediction for this year.  2022: A cashout, consolidation, with a dash of IPO PALOOZA.

Consolidation-palooza

Wow is it going to be a year of flameouts, acquisitions, and a couple IPOs!  Many businesses absolutely thrived during the pandemic. Others are just figuring out how to deal with the new normal.  Across the board, business is getting better.

Add in the absurd amount of capital looking for a home, and you have a recipe for tectonic shifts in the ownership landscape. SPACs and PE firms are ready to deal.

Adtech and media startups with half-baked business plans will continue to take on more cash…because why not. They can take the infusion to continue building out their original product or start cutting checks to acquire adjacent businesses.

What’s the hotness?

💰 Anything with CTV in the name. Honestly, it doesn’t matter what it is. Measurement, ad serving, inventory management, AVOD. You name it, there’s a buyer.

💰 Retail eCommerce. The sleeping giants of retail have awoken to the realization that they sit on a huge margin business…selling ads to their known customers.  Walmart, Target, Kroger have been the quiet incumbents until now, but even they are making big moves. Companies like Lowes home improvement are also coming into the mix.  Anything that works to serve and make this category easier to manage for CPG marketers will be an acquisition target.

💰 Publishers with authenticated audiences. The future of truly precision 1:1 marketing is up in the air for buyers and sellers that do not own their customer relationships by name. I spend an exhausting amount of time (I sense you rolling your eyes) talking about brands owning their customer data. The same applies to publishers. Content owners that operate subscription businesses or any other model that required the majority of their audiences to be logged in will print money in 2022+. They’re the only part of the publisher ecosystem truly able to target audiences at a granular level.

💰 Recurring revenue pricing models. The holy grail for ad tech vendors is to evolve into a recurring revenue (subscription or SaaS-like) business.  Much of the ad tech landscape, particularly companies facilitating media transactions, are transactional businesses. Marketers pay based on how many impressions they buy. This means that revenue fluctuates up and down.  Vendors that price their solutions on a flat, subscription basis make the same amount of revenue every month. Investors value this revenue at a much higher multiple.

And really, Terry’s celebratory wrap of 2021 is just the appetizer for what’s to come in 2022.

The not-so-hotness?

Some watch-outs for the year coming up.

☠️ Any third-party data company that does not have a cookieless solution, at scale, with buttoned-up product marketing.  Yikes, it is gonna get tough for these companies. A couple might fold, but will likely be acquired by other firms for their talent pools and any interesting residual IP.

☠️ Cookie-based attribution companies. See above.

☠️ Vendors who IPO. Maybe I’m being overly negative. Adtech startups finally going public is a great thing, especially for them. During the process, clients are sometimes left out in the breeze a bit. Often, the IPO marks the start of a long, slow unwinding of the company’s top talent.  Other times, it means a huge influx of cash and a ton of new features and products.   As an outsider that does not have their ear to the ground in the broader adtech space, clients can get a raw deal.

Does this mean anything for brands? Yep.

One of the areas I’m hired to manage for brands involves tech stack vendor selection.  In short, brands that want to take their ad technologies partly or entirely in-house need someone to guide them through the process.

It is rarely a simple thing to take on a new marketing technology vendor. Today’s ecosystem is a tangled nest of integrations, interoperability, data transfers, and hidden costs.

During these engagements, I’m constantly reminding my clients that they need to plan for the consolidation of the vendors they choose.  By that I mean, they might get 6 months into the integration of a new CDP, data visualization, or analytics deployment only to find out that one of their key vendors just got acquired by another firm. Or maybe the company goes public and that causes some temporary distractions among the team that’s supposed to be helping you.

In many cases, this has zero impact on the plan. In others, it could be a showstopper.

As a brand, do your plans change if your vendor was acquired by:

• One of the companies you disqualified during your RFP process? What if you couldn’t arrive at the right payment terms or SLA? What if the acquiring company had a dodgy reputation?
• An ad agency or agency holding company? What if it was an agency group that directly competed with your agency of record? Will everyone be able to play nicely in the sandbox?
• Google, Facebook, SalesForce, etc.?  What if one of the major drivers of your decision-making was to inject some independence into your stack only to find you’re back in the loving embrace of the mega-walled gardens?
• A private equity firm? Many PE firms have a slash and burn process where they trim down the company, often by sunsetting features and reducing support staff.

Of course, it is impossible to predict exactly what is going to happen.  And as I said, it could have no impact on your plans. It could even be a huge upgrade!

You still need to have a plan.

“What’s my rapid action plan?” That’s the question I ask over and over again in these client engagements to pressure test our assumptions.

Of course, clients are delighted when the project is completed and everything works out the way they had hoped. But man are they beyond relieved when something goes sideways and they already have an action plan framework in place.

The rapid action plan is not about having every doomsday scenario planned out in advance. Instead, it is about having a decision-making framework in place so that we are not caught flatfooted when one of our critical vendors has a change in their organization.

Anyway…

That’s my prediction for 2022, with a touch of advice for brands that could be impacted by a year of consolidation, acquisitions, and IPO’s.

I hope you all have the best year yet.