The MGI Media (B2B) segment, covers the entire value chain in the digital advertising market, consisting of agencies and trading desks, demand side platforms (DSPs), advertising networks/exchanges, supply side platforms (SSPs) and publishers.
From an advertiser’s perspective, the first stop in the online advertising industry is an agency or trade desk, depending on the degree of outsourcing required. An agency’s services include the creation, planning and execution of advertising campaigns as a full-service package that allows the advertiser to completely outsource advertising-related activities. A so-called trade desk is still very similar to an agency in its radius of action, but it does not deal with the creation of advertising content. The focus is on the purchase process of advertising inventory, which is ideally enriched with information about the target groups.
The next step in the value chain and a necessary function in programmatic advertising is a demand side platform (DSP). It bundles the demand of advertising customers and enriches it with specific data in order to match the advertising content with the advertising inventory as efficiently as possible. The counterpart to a DSP is a supply-side platform (SSP). It bundles the advertising space offered by publishers and has specific information on the properties of the available advertising inventory. An ad exchange sits between the two sides of the DSPs and SSPs and acts as a marketplace for supply and demand of ad space. This is often done through automated processes via Real Time Bidding (RTB). At the end of the value chain is a publisher who owns a medium or media platform and wants to sell his advertising inventory. With thousands of participants (buyers, publishers and intermediaries) and also various other variables like ad-formats (eg. video, banner, social posting), channels (eg. YouTube, Facebook, google, twitch, tik-tok, digital out of home, connected TV) tracking (who delivered the installation), data compliance, fraud mitigation and data enrichment, the market for online advertising and media is very complex. As in the gaming industry, a process of market consolidation is firmly underway as small players cannot invest enough in technology and change.
When operating in the gaming space, MGI management has faced a choice between hiring teams of specialists or buying specialist companies – and has in general followed the latter route. Having established a successful track-record on the gaming side of the business, MGI has followed the same approach in its media activities. Through the acquisition and integration of smaller (sometimes distressed) media companies, MGI has over the past years built a strong position in the media and advertising sector. MGI has thus far acquired; Applift (performance media agency), MediaKraft (influencer media agency), Verve (brand agency and DSP), ReachHero (influencer agency and marketplace), Pubnative (programmatic SSP and marketplace) and Adspree (game portal publisher) as well as several smaller enterprises.
Currently MGI is in the process of integrating the various media companies; defining combined product offerings, technical integrations and also team integrations. With 20+ (mostly sales) offices the media activities have global reach. Similar as in the gaming unit there are substantial revenue as well as cost synergies that are being realized.
The global digital advertising market is expected to remain a strong growth market going forward towards 2023. According to the Statista Digital Advertising report 2019, the total global volume is expected to grow from USD 334bn in 2019 to USD 426bn in 2023, which represents a CAGR of 6.3%. Social media advertising is expected to post the most attractive growth with a CAGR of 12.1% from 2019 to 2023, followed by Search (8.1%) and Video (6.8%). Ad spendings are following this trend accordingly, mobile ad spend is expected to growth with a CAGR of 14% from 2019 to 2023, while desktop is even expected to slightly decrease (CAGR of -2.2%). The programmatic ad-tech landscape has a similar structure to the gaming market, with many different apps being published and advertised every day via different channels and platforms. Especially the fast growing mobile advertising technology market, is highly competitive and penetrated by major players such as the Trade Desk (DSP) or Google Ad Manager (SSP), but is also a market that is still highly fragmented and leaves room for consolidation.