Dive Brief:
- Ad tech firms are finding venture capital hard to find and one response was a reduction in hiring during the final quarter of 2015
- Investors in ad tech expected a certain growth rate, but the reality is many of the firms are unprofitable and facing rising costs.
- Last year the martech sector overall was down at $17 billion in funding compared to 2014’s $47 billion.
Dive Insight:
Pivotal Research analyst Brian Wieser analyzed LinkedIn data to find an obvious slowing in ad tech hiring in Q4 2015. Wieser told the Wall Street Journal this was the result of venture capital no longer flowing into the ad tech sector stating, "If winter is coming or has come so to speak in terms of the funding vacuum for venture funded companies, companies may have decided they can’t just expand for the sake of expanding."
Three issues that plagued digital advertising in 2015 – ad fraud, ad blocking and viewability – have all been mentioned as potential reasons investors are shying away from ad tech for now.
For the martech sector as a whole, last year was down compared to 2014 according to VB Profiles. Funding in 2014 was $47 billion, but the marketing technology sector only reached $17 billion in funding in 2015, spread over 313 companies. There was $87 billion in martech exits.
