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The adtech industry is an exciting and ever-evolving sector, with digital advertising now at the forefront of marketing strategies worldwide. With the ever-increasing shift to digital media and online advertising, adtech companies are at the forefront of this revolution, offering innovative solutions to connect brands with their target audiences in new and engaging ways.

Adtech ETF like Global X Social Media ETF (SOCL) and the ARK Next Generation Internet ETF (ARKW), has rewarded +31.1% and +96.9% respectively in 2023.

Key Takeaways:

• The adtech industry is dynamic and rapidly evolving, driven by technological innovations and shifting consumer behaviors. Investing in this sector offers the potential to capitalize on the growing digital advertising market.
• Programmatic advertising, data-driven insights, and real-time bidding are key aspects of the adtech industry, enabling efficient and precise ad delivery.
• The top adtech stocks to consider include a mix of DSPs, SSPs, ad verification, and data connectivity platforms, each offering unique capabilities and strong growth potential.

What is Adtech?

Adtech, or advertising technology, encompasses the range of software and tools used to deliver digital advertising. It involves sophisticated data-driven processes that enable precise targeting, measurement, and optimization of ad campaigns. Adtech has revolutionized the way businesses reach and engage with their target audiences, providing personalized and relevant ad experiences across various digital platforms, including websites, mobile apps, and social media.

Adtech Market Growth:

• The global AdTech market size was estimated at USD 845.33 billion in 2023 and is expected to expand at a CAGR of 22.4% from 2024 to 2030. grandviewresearch
• The global AdTech was projected to grown from $579.4 billion to $1496.2 billion by 2030 @ CAGR of 14.5%. marketsandmarkets
• The Global AdTech Market size is expected to reach $2,365.4 billion by 2030, @ 14.0% CAGR. kbvresearch

Performance Comparison of Top Adtech Stocks

5 Best Adtech Stocks to Buy in 2024

The companies we have listed are based on hedge fund interest, using data from Insider Monkey’s Q1 2024 report.

1. The Trade Desk, Inc. (TTD)

Number of Hedge Fund Holders (Q1 2024): 43

The Trade Desk is a leading global DSP, providing a self-service platform for ad buyers. They offer sophisticated ad-buying capabilities, leveraging data insights and advanced audience targeting options.

TTD’s platform supports various digital advertising formats, including display, video, audio, and connected TV ads. They have a strong focus on data partnerships, providing access to extensive consumer data for precise targeting.

The Trade Desk Delivers Strong Growth in Q1 2024, with revenue of $491 million, representing a significant 28% increase compared to the same period in 2023. With GAAP net income surging to $32 million, more than tripling from $9 million in Q1 2023. On a non-GAAP basis, adjusted EBITDA reached $162 million, with an impressive adjusted EBITDA margin of 33%, up from 28% in Q1 2023.

According to insidermonkey, D. E. Shaw holds 4,267,374 shares of The Trade Desk, Inc. (TTD), valued at approximately $0.37 billion.

An expanded partnership with Disney, integrating Disney Advertising’s Real-Time Ad Exchange (DRAX) directly with The Trade Desk’s OpenPath technology. NBCUniversal’s decision to make 2024 Paris Olympic Games inventory on Peacock available for programmatic buying through The Trade Desk.

The Trade Desk continues to champion Unified ID 2.0 (UID2), an industry-wide approach to identity that balances relevant advertising with user privacy. Notable adoptions of UID2 include Times Internet in India, DISH Media for its TV and OTT services, and data provider Lotame. In Europe, major French broadcasters TF1 and M6 have adopted EUID, the European counterpart to UID2.

According to Wall Street Analyst on TTD stock. Of the 36 analysts following the stock, 24 give it a Buy, 7 has it at Hold and 2 calls it a Sell.

Why We Picked The Trade Desk:

The Trade Desk stands out as a top pick due to its dominant position in the programmatic advertising space and its ability to consistently innovate. The company’s focus on connected TV advertising aligns perfectly with the shifting media consumption habits of consumers. Additionally, The Trade Desk’s commitment to developing solutions for a cookieless future, such as its Unified ID 2.0 initiative, demonstrates its forward-thinking approach. With strong financial performance and a loyal customer base, The Trade Desk is well-positioned to capitalize on the growing demand for data-driven advertising solutions.

2. PubMatic (PUBM)

Number of Hedge Fund Holders (Q1 2024): 15

PubMatic is a publisher-focused SSP, providing a comprehensive platform for publishers to manage and monetize their ad inventory. They offer efficient ad delivery, sophisticated analytics, and brand-safety tools.

PUBM’s platform is known for its high-quality ad inventory and brand-safety measures, ensuring that publishers can maximize revenue while maintaining a positive user experience. They have strong relationships with premium publishers and offer unique identity and data solutions.

PubMatic exceptional financial results for the first quarter of 2024: The company reported an impressive 20% year-over-year revenue growth. Despite a net loss of $(2.5) million, PubMatic demonstrated remarkable improvement in its Adjusted EBITDA, which more than doubled from Q1 2023 to reach $15.1 million, representing a 23% margin.

PubMatic’s Q1 performance was the significant increase in Supply Path Optimization (SPO), which now represents 50% of total activity on their platform, up from 35% a year ago. The company’s focus on high-value formats and channels paid off, with mobile display and omnichannel video revenue growing by 26% year-over-year and accounting for 77% of total revenue. Notably, omnichannel video revenue, including Connected TV (CTV), surged by over 33% compared to the same period last year.

According to insidermonkey, Marshall Wace LLP, founded by Paul Marshall and Ian Wace, holds 475,948 shares of PubMatic (PUBM), valued at approximately $11.29 million.

PubMatic’s strong performance in SPO, private marketplace, and programmatic guaranteed advertising has led to new partnerships with prominent CTV streamers such as DISH Media, Vevo, and Virgin Media UK.

According to Wall Street Analyst on PUBM stock. Of the 10 analysts following the stock, 5 give it a Buy and 4 has it at Hold.

Why We Picked PubMatic:

PubMatic earns a spot on our list due to its strong positioning in the rapidly growing mobile and video advertising segments. The company’s cloud infrastructure provides a scalable and efficient solution for publishers, giving it a competitive edge. PubMatic’s proactive approach to addressing the challenges of a cookieless future through its identity solutions is particularly noteworthy. As the digital advertising landscape continues to evolve, PubMatic’s focus on emerging channels like connected TV and over-the-top (OTT) advertising makes it a compelling investment option with significant growth potential.

3. DoubleVerify (DV)

Number of Hedge Fund Holders (Q1 2024): 24

DoubleVerify is a leading provider of ad verification and measurement solutions, ensuring brand safety, ad viewability, and fraud protection for digital advertising campaigns.

DV offers comprehensive ad measurement and analytics solutions, providing advertisers with transparency and confidence in their campaign performance. They have a strong focus on combating ad fraud and ensuring brand safety across various digital channels.

DoubleVerify’s Q1 2024 results, show 15% revenue growth to $140.8 million, driven by social and CTV measurement expansion. Net income reached $7.2 million with $38.1 million adjusted EBITDA, representing a 27% margin.

According to insidermonkey, Zevenbergen Capital Investments, founded by Nancy Zevenbergen, holds 2,087,426 shares of DoubleVerify (DV), valued at approximately $73.39 million.

Success stems from product upsells, international growth, and new enterprise clients. Expansions include Asda and Hyundai, with new wins like McAfee and Carlsberg. Brand safety measurement expanded on Facebook, Instagram, and TikTok across multiple languages and regions, enhancing global coverage.

DoubleVerify partnered with Netflix to measure CTV attention using Authentic Attention®, comparing performance to other AVOD apps and FAST channels, strengthening its market position.

According to Wall Street Analyst on DV stock. Of the 22 analysts following the stock, 12 give it a Buy and 6 has it at Hold.

Why We Picked DoubleVerify:

DoubleVerify’s inclusion in our top picks is driven by the increasing importance of ad verification and brand safety in the digital advertising ecosystem. As advertisers become more conscious of where their ads appear and how they perform, DoubleVerify’s comprehensive solutions address a critical need in the market. The company’s partnerships with major platforms like Facebook and YouTube provide a strong foundation for growth. Furthermore, DoubleVerify’s expansion into connected TV and audio measurement positions it well to capture market share in these emerging channels, making it an attractive option for investors looking to capitalize on the growing demand for ad verification services.

4. Perion Network (PERI)

Number of Hedge Fund Holders (Q1 2024): 18

Perion is a technology company providing innovative advertising and search monetization solutions. They offer a comprehensive suite of ad tech and data-driven capabilities to help brands and publishers optimize their campaigns.

PERI’s unique offering includes a social media management platform, a search monetization platform, and a data-driven advertising solution that utilizes AI and machine learning to enhance campaign performance.

According to insidermonkey, Private Capital Management, led by Gregg J. Powers, holds 1,515,512 shares of Perion Network (PERI), valued at approximately $34.07 million.

Perion Network (PERI) reported mixed results for Q1 2024, with significant growth in Retail Media and CTV revenues offset by a decline in Video revenue. Retail Media revenue surged 134% year-over-year to $14.9 million, now representing 20% of Advertising Solutions revenue. CTV revenue also saw strong growth, increasing 108% to $8.2 million.

However, Video revenue decreased by 52%, now accounting for 22% of Advertising Solutions revenue compared to 44% last year. While Average Daily Searches increased by 20% to 31.6 million and Search Advertising publishers grew by 8% to 168, the company noted a concerning trend.

According to Wall Street Analyst on PERI stock. Of the 6 analysts following the stock, 6 has it at Hold.

Why We Picked Perion Network:

Perion Network makes our list due to its diversified approach to digital advertising and its strong technological foundation. The company’s ability to offer solutions across search, social media, and display advertising provides multiple revenue streams and reduces dependency on any single channel. Perion’s proprietary intelligent targeting and optimization technology gives it a competitive edge in an increasingly data-driven industry. The company’s consistent financial growth and profitability, coupled with its strategic partnerships with major tech companies, make it a solid choice for investors seeking exposure to various aspects of the digital advertising ecosystem.

5. Magnite (MGNI)

Number of Hedge Fund Holders (Q1 2024): 24

Magnite is a digital advertising technology company that provides a unified SSP platform for publishers to manage their ad inventory and maximize revenue.

MGNI’s platform supports various ad formats, including CTV, online video, display, and audio ads. They have a strong focus on header bidding solutions, providing publishers with increased control and transparency over their ad inventory.

According to insidermonkey, Lynrock Lake, associated with Cynthia Paul, holds 131,167,000 shares of Magnite (MGNI) in the form of a note with 0.250% interest due 3/1, valued at approximately $117.39 million.

Magnite’s Q1 2024 results show strong growth, with revenue up 15% year-over-year to $149.3 million. The company’s Contribution ex-TAC increased 12% to $130.6 million, with particularly strong performance in CTV, which grew 18% to $54.9 million, exceeding guidance.

While Magnite still reported a net loss of $17.8 million, this was a significant improvement from the $98.7 million loss in Q1 2023. Adjusted EBITDA rose to $25.0 million, representing a 19% margin. The company’s non-GAAP earnings per share also improved slightly from $0.04 to $0.05 year-over-year.

According to Wall Street Analyst on MGNI stock. Of the 10 analysts following the stock, 10 give it a Buy.

Why We Picked Magnite:

Magnite secures a spot in our top picks primarily due to its leading position in the rapidly growing connected TV advertising market. As the world’s largest independent sell-side advertising platform, Magnite offers unparalleled scale and reach for publishers. The company’s comprehensive suite of solutions caters to the evolving needs of both publishers and advertisers, positioning it as a one-stop-shop for programmatic advertising. Magnite’s strong relationships with premium publishers and its ability to leverage the combined strengths of Rubicon Project and Telaria make it a formidable player in the adtech landscape, with significant potential for long-term growth.

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Conclusion:

Investing in adtech stocks offers the potential to capitalize on the growing digital advertising landscape and innovative technological advancements. The companies featured in this article represent some of the most promising opportunities within the adtech space for 2024.

FAQs

1. Why should I consider investing in adtech stocks?

Adtech stocks offer exposure to the rapidly growing digital advertising industry, which is driven by increasing online ad spend and the need for more efficient, targeted marketing solutions. As businesses continue to shift their focus to digital channels, adtech companies are well-positioned to benefit from this trend.

2. Are there any ETFs focused on adtech stocks?

Yes, there are ETFs that provide exposure to the adtech sector, such as the Global X Social Media ETF (SOCL) and the ARK Next Generation Internet ETF (ARKW). These ETFs include adtech companies among their holdings, although they are not exclusively focused on adtech.

3. How can I stay informed about developments in the adtech industry?

To stay up-to-date on adtech trends and news, you can follow industry publications like AdExchanger, AdWeek, and MarTech Today. Additionally, attending virtual or in-person adtech conferences, following key industry figures on social media, and monitoring earnings reports and investor presentations from major adtech companies can provide valuable insights.

4. How is the adtech industry evolving, and what are the key trends to watch?

The adtech industry is constantly evolving, driven by technological advancements and shifts in consumer behavior:

• Programmatic Dominance: Programmatic advertising will continue to gain traction, with advertisers embracing automated, data-driven ad buying.
• Connected TV and OTT: The rise of CTV and OTT platforms creates new opportunities for adtech companies to deliver targeted ads in premium, brand-safe environments.
• Identity and Data Solutions: As consumer privacy regulations tighten, solutions enabling advertisers to activate first-party data and providing identity resolution will be in high demand.
• Omnichannel Advertising: Advertisers seek solutions for consistent messaging and measurement across multiple digital touchpoints.
• Advanced Measurement and Analytics: There is a growing demand for transparent and accurate ad measurement solutions.

5. How does adtech differ from martech, and why is it beneficial to invest in companies that bridge these sectors?

• Adtech vs. Martech: Adtech specifically focuses on the technology and platforms for digital advertising, including programmatic advertising, RTB platforms, and ad exchanges. Martech encompasses a broader range of tools for various marketing activities beyond just advertising.
• Benefits of Bridging Adtech and Martech: Companies that offer solutions spanning both sectors provide a comprehensive suite of tools to help brands manage their marketing efforts holistically. These companies can facilitate data connectivity across channels, enhance campaign effectiveness, and provide valuable insights, making them attractive investment prospects.