See first: 2016 predictions for Mobile Marketing
In terms of industry headline value, possibly the two most intriguing mobile advertising developments in 2016 were perpetrated by platform operators: Google massively extended its suite of mobile advertising products and Apple introduced in-store search ads. Consolidation and M&A also provided plenty of water cooler chat fodder, as Applovin sold to a Chinese private equity fund for $1.4BN and Adobe announced that it will acquire TubeMogul for $540MM. Consolidation and increased encroachment on the advertising space by platform operators both seem like themes that will continue to remain relevant in 2017, for better or worse as pertains to mobile advertisers and AdTech / MarTech companies. With that said, I present three of my predictions for 2017 in the mobile marketing space.
Consolidation in the AdTech and MarTech space will heat up, and one of the major attribution platforms will be acquired.
With the number of new, high-budget advertisers entering the app economy slowing, the AdTech and MarTech spaces have become increasingly — and potentially unsustainably — competitive. The AdTech and MarTech companies that raised lots of money have progressively turned to aggressive and hostile tactics in order to win new business: poaching customers and key employees in an attempt to carve out enough marketshare to ensure that they survive a possible future famine.
I believe that a non-trivial number of these firms will be acquired this coming year, especially those that focus very narrowly on a specific functional area related to mobile advertising (analytics, cost aggregation, CRM). This wave of M&A will probably be undertaken by larger mobile advertisers platforms in an attempt to use horizontal integration as a means of achieving defensible customer lock-in.
Additionally, I think one of the “Big 4” attribution providers — Kochava, TUNE, Appsflyer, and Adjust — will be acquired this year, as slim margins, a fairly small number of brand advertisers with an appetite for spending substantial sums of money on mobile and outside of Facebook / Google, and low demand for ancillary feature upsells (eg. fraud prevention) from major mobile advertisers forces one of the major players into a sale posture, possibly for its proprietary data.
A major, possibly existential incident for an AdTech / MarTech company involving data privacy and / or fraud will take place.
The hyper-competitive environment described above has led to increasingly reckless and “ethically adventurous” behavior by some AdTech and MarTech companies with respect to data privacy and protection. Many companies have begun to see their proprietary data as a competitive advantage to use in winning new business. Most of this behavior is benign and will most likely self correct in a frothy M&A environment, but I believe that a major breach in customer privacy this coming year by an AdTech / MarTech firm will lead to its ruin.
Some of the disregard for customer privacy with respect to selling and trading data that I’ve seen this year has been so egregious that I’m convinced it’s only a matter of time until a particularly damning incident goes public. The good news is that such an incident will likely “scare straight” much of the rest of the industry, especially as M&A due diligence begins to focus on data responsibility.
Non-performance tactics will fall out of favor with small and medium-sized advertisers.
Google’s acquisition of FameBit in October and Facebook’s sponsorship of content from celebrities for its Facebook Live product showcase how seriously some of the larger platforms take influencer marketing. But in reality, the effectiveness of influencer marketing is highly dependent on budget, much in the same way that it is with television advertising and other non-direct response channels: saturation campaigns can create the kind of buzz that acts as a force multiplier on spend and generates organic interest, but what the threshold for saturation is and how much it costs to attain is largely unknowable a priori.
Influencer campaigns appear to be losing favor with the smaller developers that can’t afford to use them to the extent that they create value, which is very much a binary proposition for these types of campaigns (they either reach an awareness threshold and incite word of mouth or they don’t). The same can also be said for retargeting campaigns, which were touted as the “next big thing” for mobile advertising in 2014 / 2015 but never materialized as a scaleable, profitable channel for many developers. I see many small and medium-sized developers adhering to the fanatical dogma of unit economy profitability now, and I believe that this will incite a shift away from non-direct response, non-performance oriented tactics like influencer and re-targeting campaigns in 2017.