#4 Shetland Pony Story: Why We Need to Consolidate Poneys’ Stables in a Challenging Economic Environment?

In a world where economic conditions keep changing, profit is now a major player in how companies are valued. Let's look at how "Ponies" (profitable companies) can get through tough times and make the most of the opportunities they find.

When the economy goes downhill, Ponies show us how to keep going.

Some companies, like Adikteev, show that they can keep making a profit even when times are tough, just like the data from Bain & Company's Global Recession Watch shows. Ponies don't lose their edge even in hard times because they keep delivering solid financial results.

For example, when global recessions hit, profitable companies have been found to do better than their peers with an average yearly total shareholder return of 1.9%, compared to a -11.1% drop for companies that aren't profitable (source: Bain & Company article). By standing strong in downturns and shifting their focus when needed, Ponies prove their worth and help drive steady growth, which benefits their industries and the wider economy.

Stables are aiming to grow in the coming months.

In the fast-changing world of Adtech, getting big enough to matter is becoming more critical as the industry gets bigger and privacy concerns rise. As stated in the Xenoss article on Adtech trends for 2023, the market is seeing a significant move toward consolidation driven by the need for efficiency, scale, and better ways to target audiences. Industry data shows that the Adtech market had over $118 billion worth of mergers and acquisitions (M&A) in 2022, with a big chunk going to companies wanting to get big enough to hold their own in the market (source: Xenoss).

Getting big enough is more possible for profitable companies, the Ponies, compared to those that have focused on growth but sacrificed profitability. With profit as their base, these Ponies have the resources and stability to put money into strong privacy protections, the latest tech, and compliance measures. In fact, profitable Adtech companies have been found to put an average of 28.7% of their income into tech and innovation, letting them keep up with privacy rules and provide better data protection.?

Being profitable not only gives Ponies a stronger bargaining position during consolidation but also strengthens their place in the market, allowing them to make the most of the opportunities that consolidation brings.

These Ponies can make good deals, form strategic partnerships, and expand their offerings, making their success in the Adtech market more likely in the long run. When the economy is struggling, being profitable can keep things calm and steady.

?As the market keeps consolidating in 2023, the insights from VentureBeat on ad tech consolidation further strengthen my belief in the importance of getting big enough for ad tech companies. According to this article, from March 2023, over 200 M&A deals in the ad tech space happened in the first half of 2022, with a total deal value of $28 billion.

This data supports the idea that consolidation is a key strategy for companies wanting to strengthen their position and shape the future of the industry.

The author, Sameer Sondhy (Verve Group), also talks about the benefits of consolidation in making operations more efficient. Research presented in the same article indicates that ad tech companies that get big through consolidation have a better chance of surviving and growing.

Conclusion

If they're smart enough to form the right partnerships, Ponies are likely to secure their position at the forefront of the evolving ad tech landscape. Financial stability, synergistic partnerships, and compliance measures will ensure competitive advantage amidst market consolidation, helping them become industry leaders for the coming years.