Vagaries Of Google Dependency; M&A In Full Swing; Making Roll-Ups Work
Learn To Live With Or Without Google
Google's recent announcement that it is NOT deprecating came as no surprise.
Google is a monopolist (officially) and does as it pleases - so shock should not be the first thing you feel.
The industry's collective sigh of relief is baffling to any sane person. Buyers have given up parts of the web (Safari, Mozilla) with no signal, and Google’s decision will make things even worse.
How stupid is it not to optimise for the world's most affluent segment - namely, Apple users? Brands should be slapping people across the head for over-indexing to a dwindling pool of 3PC Chrome users.
By putting the decision in the hands of consumers, Google has checked any pushback by regulators. The “monopolist” found an elegant way to avoid its obligation to replace and save the third-party cookie.
Any dependency on Google and the Chrome 3rd party cookie is existential. Whatever way you look at it, the third-party cookie will diminish in scale as users opt out.
We at FPC have always maintained that our portfolio companies must not depend on Google. Google should be seen as another walled garden, not an ad tech meal ticket. Ultimately, it serves the needs of itself and its shareholders - not the industry.
Google is just another part of the media and marketing ecosystem. Granted, it is outsized on the open web - but the big G does not dominate high-growth areas of ad tech.
Remember, we operate in a media and marketing kaleidoscope comprising micro-walled gardens, monolithic walled gardens, the vast array of media channels (including TV, OOH, retail media and more) and the curated (formerly open) web.
We invest in companies that understand the $1 trillion opportunity is bigger than just Google.
We’d be happy to discuss the portfolio and show you how Google's decision does not affect our companies' commercial success and scalability.
Agency over your ad tech destiny has never been more critical to survival and success.
M&A Bubbling Up
After a few false starts, the ad tech M&A market has burst into life. The European ad tech space has seen nearly $1.7 billion in exits this year alone (see European M&A graphic below) - and we still have a chunk of the year left.
A few celebrity banker friends have informed FPC that at least one or two nine-figure deals are in the works. What a time to be alive.
What does this mean for our LPs? In the short term, relatively little. Our bigger deals are 12 months out. Despite Google's cack-handed strategy around 3PC deprecation, it has not affected the deal appetite.
Both strategic buyers and PE are on the hunt for ad tech.
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Making Ad Tech Roll-Ups Work
Ad tech roll-ups are in vogue. Everyone is trying to combine random companies. FPC hears and sees it all.
In principle, there is nothing with roll-ups; it’s just that they are challenging to execute.
Why do roll-ups never really get past the conceptual stage?
Mostly, the people behind most of the roll-ups have never worked in ad tech. Disastrous consequences are inevitable. If you’re going to do it, understand your market. Have domain knowledge.
There always needs to be a coherent strategy. It’s just an idea of some scaled play. The best roll-up is the one that has a pre-baked sale prepared and is ready to go. Always have a plan. Founders like plans and financial outcomes.
You need to select the right companies that not only look good on a spreadsheet but also fit technically and culturally. Even if they have EBITDA, they might not work together. Remember, there is going to be an earn-out period. These people have to pull in the same direction.
The funding for these roll-ups is often speculative. Have the money secured before engaging in roll-up conversations.
If you are serious about merging multiple ad tech cos and have a solid plan, come to talk to FPC. We are always open to opportunities.
On that overt sales note, we will sign off for this edition. Stay safe, and have an epic ad tech weekend.