The mood in the tech industry has been bad for months. The entire industry is in a severe crisis. Around 120,000 employees worldwide lost their jobs last year. The wave of layoffs is not even stopping at tech giants like Google, Amazon and others -even though they were always considered invincible.
Recession hits hard
For a longtime, the GAMA companies continuously made billions in profits. At times, their stock market values even exceeded the gross domestic product of entire industrial nations. But after the Corona boom, profits plummeted, turbo growth slowed, and tech stocks plummeted. The inevitable has happened: The recession has also reached the big players.
Ad techs are facing difficulties too
It is no wonder that the ad tech market is also in an uproar. The situation came to ahead at the beginning of February when ad-tech vendor EMX filed for bankruptcy, the latest chapter in a long saga of financial challenges facing the supply-side platform. Not long after that industry giant Yahoo announced it was divesting its SSP division and had to lay off 1,600 employees from the tech divison. And if that wasn't enough bad news, the bankruptcy of Silicon Valley Bank (SVB) became public on March 10.
SVB bankruptcy is a threat to the entire industry
The US money house, which specializes in start-up financing, was temporarily closed onFriday evening after a failed emergency capital increase and placed under state control. Since, according to statements on its website, SVB has business relationships with nearly half of all venture capital-funded technology companies in the US, the impact is likely to be devastating. To put it in perspective: An entire generation of startups is threatened. If you consider the upstream effect, i.e. the suppliers and partners of the affected startups, it’s like an earthquake for the ad tech industry.
Publishers are infected and therefore worried too
Logically, these developments are causing many publishers great concern. They are quite right to ask: Are our technology partners well positioned and fit for the future? And if not, which company would be such a partner? We would like to take this as an opportunity to explain ConnectAd’s position in a little more detail. Not to spoil or anything, but this much should already be said …
… once again it’s a good thing that we’re different
ConnectAd is different. We always have been, we still are – and we will always be very proud of that. Because the path we took has sometimes been hard, but always honest and in the long run it was all worth it. This becomes particularly clear in challenging times like these. Because now we can see that the way we have been running our company all this time has only advantages for publishers, advertisers and, of course, for ourselves.
ConnectAd grew out of an idea the founding team had over 10 years ago. Since all the founders were already successful entrepreneurs at that time, we had the great advantage that sufficient start-up capital was available and we did not have to take on outside capital. To be honest, we didn't want to do that either. However, we are aware that this is the exception rather than the rule and that many of our competitors cannot afford (or do not want) such a "luxury".
Organic growth for the win
Our company path has therefore been different from that of most tech startups. We have been profitable from the very beginning and have always financed our growth from our own resources. Since it was always our money that was invested, we always invested carefully and prudently. We only know common terms like "cash burn" from the media. The topic is foreign to us as it does not fit the philosophy of ConnectAd. Because we preferred organic growth to the fast track, we were always so stable that, among other things, we were even able to step in as SSP in 2019 in the wake of the Sizmek insolvency. To protect our publishers, we took over all defaults – without earning a single euro.
We are good but feel sad for all those affected
The events of the last weeks have strengthened us in our strategy and our actions. We continue to go one step at a time and keep the focus on our product and on the customer relationship with our publishers and advertising partners – and the success proves us right. We are in the fortunate position to continue to grow in a healthy way, both in terms of employees (hit us up in case you’re looking for a new challenge) and the expansion of new territories with a focus on continental Europe.
At the same time, we are very concerned that so many other companies are struggling for survival, some of them cannot continue to operate and talented employees are losing their jobs. We wish that the tech industry will soon return to calmer waters and send many positive thoughts to all who are affected.
