#68: Forensic AdTech SpaceScape v3.0
Evolution to Version 3.0 + Data Analysis And Insights
Reading Time: 4 data-driven minutes
Welcome back to our evolving series on Forensic AdTech. We’ve moved quickly from v2.0 last week to v3.0 with just a couple of updates. The more interesting aspect of this particular post is breaking down the numbers behind the SpaceScape. First the updates, then the numbers.
Version 3.0 Updates
The Privacy Compliance Management category has been changed to Data Compliance Management. While both types of companies reside inside this category, it’s important to decouple data compliance from privacy compliance.
The distinction is a subtle one. “Privacy” tends to be the domain of lawyers, privacy professionals, and data governance leads. In contrast, “data compliance” is the responsibility of business and media marketing leads. Those are two very different economic buyers. As this category grows with new players, Quo Vadis will likely split it out at some point down the road.
Log Data, Supply Chain Analysis & Research has been modified as Log Data *Usage*, Supply Chain Analysis & Research which illustrates an important point— simply having access to log data is not impactful enough on its own. What matters is what you do with it. For example, turning log data into a custom algorithm, feeding an AI bidding model, or moving from lemon market economics to cherry-picking the good stuff at the right price can be highly impactful.
Shout-outs
Our shout-out this week goes to James O’Conner, founder of Turbine Advisory, a management consulting firm focused on providing sustainability strategies across the advertising supply chain. If you’re playing in the Environment (ESG) category and looking for direction and sharp advice, you should reach out to Turbine.
Data Analysis And Insights (with more to come)
All the logos and categorization criteria are supported by a neat data set that continues to expand and evolve. We picked a few choice data points to tell you about today:
74 total companies are in the Forenstic AdTech SpaceScape including Media Monitoring and Consent Management which are more tangentle than forensic in our view.
44 or 59% of the companies are categorized as “forensic” (the blue-hashed categories).
1,484 employees work or are associated with the 44 forensic companies (according to LinkedIn).
Note: The correlation between public company-disclosed employee counts and LinkedIn is quite high so our estimates are sound and probably pretty close to reality.
23 out of 44 forensic players (52%) are funded based on what we can see on Crunchbase. In all likelihood, we assume slightly more than 52% are actually funded but not recorded on Crunchbase (think friends & family funds, undisclosed convertible notes, small pre-seed equity investments, etc.).
Total funding across the 23 funded players is $274 million bringing average funding per company to $12 million ($274 ➗ 23).
Average age of the 51 forensic adtech companies is 5.5 years compared to 9.2 years across the Media Monitoring and Consent Management companies.
Market Size by Total Revenue
Quo Vadis estimates that total revenue across the 44 forensic companies was around $297 million in 2023. Here’s how we get there…
Comp Set: We started by looking at historical revenue and employee counts from our AdTechCore10 (TTD, CTRO, DSP, MGNI, PUBM, DV, IAS, TBLA, OB, and RAMP) and also from our MarTechCore10 (SHOP, HUBS, TWLO, KYVO, ZI, BRZE, SQSP, CXM, SPT, and SEMR). Some forensic adtech companies are hinged to media flows while others are more SaaS-based. The comp set attempts to encompass both types.
Employee Productivity: From there we solved for revenue per employee and also calculated each company’s age based on its founding year. With revenue per employee on one axis and age on the other, we end up with a nice estimate of revenue per employee in all previous years back to age zero (before going public) for each company. In other words, we work backward in time from the last disclosed value using a natural log formula.
For example, a one-year-old company across the AdTech and MarTech comp set (aka MadTech) generates around ~$125K in revenue/employee.
A one-year-old AdTech generates ~$150K in revenue/employee with around
A one-year-old MarTech comp generates ~$55K/employee
From there, we mapped each company’s age to an implied age-calibrated revenue/employee value and then multiplied it by the current number of employees today leading us to $297 million in total revenue across all 44 forensic adtech companies in 2023.
Gaming Out Hypothetical Funding
Let’s say you’re a CEO/founder of one of the 21 forensic adtech companies that have not raised money yet. You’ve been bootstrapping for the past two years with perhaps a bit of friends and family money and you have eight employees today.
A two-year-old company should have around $145K in revenue per employee (blended Madtech comp), so total annual revenue is about $1.1 million today.
Lucky for you, Quo Vadis gave you a regression model estimate telling you that the funding level for a company with 8 employees across the forensic adtech sector is around $260K per employee.
Therefore, if you’re raising a seed or pre-A round, your implied funding level is around $2.1 million (8 employees x $260K).
Now, imagine you plan on having 20 total employees by the end of your second year after the funding round. You’ll be four years old by then and hopefully averaging $170K in revenue per employee — that’s what the public adtech/martech comps tell us — and generate around $3.4 million in annual revenue in your fourth year of life. That means you’re implied revenue CAGR over the two years is 71%.
Our AdTechCore10 and MarTechCore10 public comps are trading at a weighted average of 11x revenue today with a range between 0.8x (OB) and 20x (TTD) with a median equity value-to-revenue multiple of 5.3x. That means, your pre-money valuation is likely somewhere between $6.2 million and $12.3 million and you’ll likely end up trading 14% to 25% in equity in exchange for the working capital/growth funds.
We’ll have more interesting numbers for you next week.
Ask Us Anything (About Programmatic)
If you are confused about something, a bunch of other folks are probably confused about the same exact thing. So here’s a no-judgment way to learn more about the programmatic ad world. Ask us anything about the wide world of programmatic, and we’ll select a few questions to answer in our next newsletter.
Join Our Growing Quo Vadis Community
Was this email forwarded to you? Sign up for our monthly newsletter here.
Get Quo Vadis+
When you join our paid subscription, you get at least one new tool every month that will help you make better decisions about programmatic ad strategy.
Off-the-beaten-path models and analysis of publicly traded programmatic companies.
Frameworks to disentangle supply chain cost into radical transparency.
Practical campaign use cases for rapid testing and learning.
Disclaimer: This post, and any other post from Quo Vadis, should not be considered investment advice. This content is for informational purposes only. You should not construe this information, or any other material from Quo Vadis, as investment, financial, or any other form of advice.