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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

The companies we have listed are based on hedge fund interest, using data from Insider Monkey’s Q3 2024 report.

1. The Trade Desk, Inc. (TTD)

Number of Hedge Fund Holders (Q3 2024): 42

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 reported strong third-quarter performance with revenue reaching $628 million, representing a 27% year-over-year growth. The company’s CEO Jeff Green emphasized the value advertisers place on precision and transparency in their campaigns. Net income for the quarter was $94 million, with a net income margin of 15%, while adjusted EBITDA reached $257 million with a 41% margin.

According to insidermonkey, Investment firm D.E. Shaw holds a $0.32 billion position in The Trade Desk (TTD), with approximately 2.94 million shares in their portfolio.

The company maintained its impressive customer retention rate of over 95%, continuing a decade-long trend. Notable developments included expanded partnerships and integrations for their Unified ID 2.0 (UID2) initiative, with major players like Spotify and Roku joining the program. UID2 serves as an alternative to third-party cookies, focusing on user privacy while preserving relevant advertising value.

Looking ahead to Q4 2024, The Trade Desk provided guidance of at least $756 million in revenue and approximately $363 million in adjusted EBITDA. The company appears ready to capture a greater share of the $1 trillion advertising market, with particular strength in Connected TV (CTV) advertising and retail media. During the quarter, the company also repurchased $54 million of its Class A common stock, with $521 million still available for future repurchases.

According to Wall Street Analyst on TTD stock. Of the 39 analysts following the stock, 28 give it a Buy, 6 has it at Hold and 3 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 (Q3 2024): 13

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 reported strong third-quarter financial results for 2024, with revenue reaching $71.8 million, marking a 13% increase compared to Q3 2023. The company performed better than expected, showing particular strength in Connected TV (CTV) and mobile app segments. Notably, PubMatic now serves 70% of top streamers, offering them premium CTV inventory to meet growing advertising demands.

According to insidermonkey, Renaissance Technologies, led by Jim Simons, holds 1,093,600 shares of PubMatic (PUBM) worth approximately $16.3 billion.

Despite the revenue growth, the company reported a net loss of $(0.9) million, compared to a net income of $1.8 million in the same period last year. However, other financial measures remained strong, with adjusted EBITDA at $18.5 million (26% margin) and gross profit up by 23% to $46.3 million. The company maintains healthy finances with $140.4 million in cash and marketable securities, and no debt.

PubMatic has been actively managing its capital, buying back 3.6 million shares year-to-date, representing 6.5% of fully diluted shares as of September 30, 2024. Since starting its stock repurchase program, the company has bought 7.6 million shares of Class A common stock, using $124.1 million and representing 13.9% of fully diluted shares. The company earned recognition as a leader in The Forrester Wave™: Sell-Side Platforms report for Q4 2024, the first time Forrester has reviewed the SSP category in over a decade.

According to Wall Street Analyst on PUBM stock. Of the 11 analysts following the stock, 6 give it a Buy and 5 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 (Q3 2024): 33

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 posted impressive Q3 2024 results with total revenue reaching $169.6 million, an 18% increase year-over-year. The company reported net income of $18.2 million and adjusted EBITDA of $60.2 million, maintaining a strong 35% EBITDA margin across its revenue streams.

According to insidermonkey, Millennium Management, led by Israel Englander, took a position in DoubleVerify (DV) worth $48.2 million, purchasing 2.9 million shares.

The quarter saw significant market share expansion through key client acquisitions, including Microsoft, and successful partnerships with major brands like P&G and BlackRock. The company also strengthened its relationships with platforms such as The Trade Desk and Meta, while adding new publishing partners like The New York Times.

DoubleVerify continues to innovate with new product launches planned for 2025, including content-level pre-bid avoidance on Facebook and Instagram. The company is expanding its measurement capabilities across multiple platforms, including TikTok, Roblox, Spotify, LinkedIn, and Netflix, reinforcing its position as a leader in digital media measurement and analytics.

According to Wall Street Analyst on DV stock. Of the 22 analysts following the stock, 13 give it a Buy, 5 has it at Hold and 1 calls it a Sell.

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 (Q3 2024): 21

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.

Perion Network Ltd. reported strong growth in its third quarter 2024 results, with DOOH revenue up 63% to $19.1 million (23% of Advertising Solutions revenue) and Retail Media revenue increasing 62% to $21.0 million (26% of Advertising Solutions revenue). CTV revenue also grew 19% to $9.5 million, representing 12% of Advertising Solutions revenue.

According to insidermonkey, Gregg J. Powers of Private Capital Management invested $18.8 billion in Perion Network (PERI), holding 2,387,800 shares.

CEO Tal Jacobson expressed satisfaction with the results, emphasizing how their multi-channel strategy is successfully engaging advertisers across various platforms. The company’s focus on DOOH, Retail Media, and CTV has positioned them well in these high-growth sectors of digital advertising.

However, the company faced challenges in other areas, with Open Web Video revenue declining 63% year-over-year and Search Advertising revenue dropping 76% to $20.9 million. Notably, their Microsoft Bing contract, representing less than 5% of overall revenue, will not be renewed after 2024, though it will continue generating revenue into 2025 through a tail period.

According to Wall Street Analyst on PERI stock. Of the 6 analysts following the stock, 1 give it a Buy and 5 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 (Q3 2024): 21

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.

Magnite reported strong third-quarter results for 2024, with total revenue growing 8% year-over-year to $162 million. The company’s Contribution ex-TAC increased by 12% to $149.4 million, with CTV revenue showing particularly impressive growth of 23% to reach $64.4 million.

According to insidermonkey, Investment firm Marshall Wace LLP, led by Paul Marshall and Ian Wace, holds $50.5 billion worth of Magnite (MGNI) shares – 3.6 million shares.

A significant highlight of the quarter was Magnite’s support of Netflix’s initial programmatic CTV ad launch. The company also reported net income of $5.2 million, a notable improvement from the $17.5 million loss in Q3 2023, while Adjusted EBITDA reached $50.6 million with a 34% margin.

Looking ahead, Magnite has raised its full-year 2024 guidance, expecting Contribution ex-TAC to grow 11-12%. The company anticipates continued expansion with Netflix through Q4 and into 2025, with CEO Michael Barrett expressing optimism about growth opportunities in live sports, commerce media, ClearLine, and programmatic CTV adoption.

According to Wall Street Analyst on MGNI stock. Of the 13 analysts following the stock, 12 give it a Buy and 1 has it on Hold.

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 2025.

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.