Today Rubicon Project and Telaria announced they would merge into a single sell-side company, yet to be named. The plan is to take on walled giants of Facebook and Google, who account for the overwhelming majority of the digital ad spend globally. But is the Rubicon Telaria merger good or bad for ad tech?
Ad Tech Mergers Can Be Good Or Bad
Generally speaking, the more consolidation there is, the worse off an industry is. If a few companies consolidate into oligopolies, customers are more vulnerable to their demands. If a few oligopolies consolidate into a potential monopoly, that tends to increase customer vulnerability even more. That’s why everyone was up in arms when Taboola and Outbrain announced their merger.
The Rubicon Telaria Merger Is Good
Given the oligopoly that exists between Facebook and Google, any market share gained by other parties can only bode well for ad-tech. Rubicon recently acquired sell-side platform RTK.io, giving sell-siders access to far better advertising demand. This was a win for sell-side pubs. Now that Telaria, a video platform, will have access to Rubicon’s desk, it will equal out the playing field that walled-giants Facebook (Instagram) and Google (YouTube) have on video.
More Ad Tech Consolidation in 2020
We predict there will be more consolidation in ad tech in 2020 for two main reasons: technology and credit.
Consolidations in the form of mergers
Lots of companies are starting to see and exploit synergies between existing proprietary technologies (like Rubicon and Telaria). This will lead to consolidations in the form of mergers and acquisitions.
Consolidations in form of distressed ad tech assets
Many companies are also seeing credit and cash flow issues, which lead to mergers and acquisitions in the event of a company blowing up, and then ad tech assets trading hands (i.e. Amazon getting Sizmek’s DSP technology).
What the Rubicon Telaria Merger Means for Payments
The Rubicon Telaria merger is expected to close in July. We will be watching closely to see what this does to payments. Historically we have noted that mergers are generally bad for payments, because two companies now have to vertically consolidate their A/P departments. Not really a credit issue but more so an operational / administrative issue that causes payment delays. We will report our findings in future payment studies as the data comes in.
