Vista Equity Partners Intensifies Digital Ad War with Facebook and Google

  • The digital advertising industry is an $88B market
  • Google and Facebook accounted for 90% of digital advertising growth in 2017

Facebook (FB +1.27%) and Google (GOOGL +0.72%) are getting increased competition from Vista Equity Partners. The private equity giant bought a majority stake in Integral Ad Science (IAS) at a valuation of $850 million, according to Axios. This is the third advertising technology business Vista has invested in or acquired over the past three years. What role is Vista Equity Partners playing in taking on Facebook and Google’s control of digital advertising?

Why This Matters: Digital advertising is an $88 billion industry and rapidly growing. Google and Facebook drove 90% of the industry’s 21% growth between 2016 and 2017. The consensus is the two companies will continue to increase their dominance of the space because of the ease with which small businesses and retailers can purchase targeted ads.

IAS addresses weaknesses both companies have in their advertising businesses. Google has confessed to struggling with a brand safety problem. For example, YouTube has been the aim of a lot of criticism due to companies ads showing up next to content from promoting conspiracy theories. IAS ensures that sort of placement doesn’t happen. The company also provides solutions for ad viewability issues which forced Facebook to allow third parties to check its metrics. IAS discovered Facebook’s video ad view rates were between 20-30% which is well below industry averages.

Vista Equity Partners has an opportunity to position IAS as the preferred brand for companies to use in verifying their ads are in good hands. This position could exploit advertisers’ increased skepticism of Google and Facebook and chip away at their dominance of the industry.

What’s Next: The Cannes Lions Festival which brings together the entire advertising industry starts the week of June 18. Expect there to be several panels focused on the future of the digital advertising space in a world currently dominated by Facebook and Google.

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