Where is ad tech headed? Follow the VC money.

After sinking to a decade low in 2024, venture capitalist investment in ad tech is heating up again. That’s according to Eric Franchi, general partner at Aperiam, a VC firm focused on ad tech- and martech.

While economic uncertainty continues to weigh on most industries — even after the tentative U.S.-China tariff truce — investors see ad tech as a bright spot.

The deals closed in the last six months indicate where those holding the purse strings believe the industry is headed.

Four key themes are emerging: making connected TV (CTV) a performance channel; creating new ad networks that sell inventory in retail spaces across screens, cooler doors, shelf-edge displays and more; embedding ads into content and chatbot conversations using AI; and proving ROI with new measurement tactics.

“The sentiment feels quite positive for ad tech and martech”

“CTV and retail media are probably two of the largest growth opportunities that sit in front of ad tech today,” explains Sam Thompson, founding partner at Progress Ventures, while noting that big-brand TV budgets have only begun migrating to streaming.

The shift to streaming and the rise of commerce media, which directly ties advertising to purchasing, are creating a “sentiment [that] feels quite positive for ad tech and martech,” Franchi adds.

Thompson agrees that “buyer’s market” valuations, which depress the price of companies because of the underlying economic headwinds, let disciplined investors snap up tech that addresses emerging needs.

In February, California-based tvScientific landed a $25.5 million Series B funding to bring cost-per-action buying and self-serve tools to CTV advertising. It’s a signal that CTV is becoming not just a reach channel, but a performance one.

But CTV advertising is not the only space that investors are eyeing right now.

“Interest runs hot and cold in ad tech, but right now the temperature is rising,” Franchi says.

Among the hottest elements of ad tech are those involved in retailers’ physical real estate. In January, Dallas-based Qsic secured a $25 million Series B round to install in-store speakers to run programmatic ads targeting customers.

Thompson likens today’s retail media boom to “the early days of the ad networks, where now you’ve got a ton of retailers becoming the publishers, owning the relationship with the consumer and opening up a market that is highly fragmented.”

Within Progress Ventures’ own portfolio, Thompson is pushing portfolio companies to marry retailer data with CTV activations so that off-site media spend drives measurable in-store sales — an evolution he describes as “fascinating.”

Betting on AI

As with every other sector and industry, AI is also a hot-button area for investors. Franchi recalls three recent Series A announcements in which Aperiam has been involved.

“What do these three companies have in common? They are for AI startups,” he says.

Virtual product placement startup Rembrand — which Aperiam backed — raised an impressive $23 million Series A round early this year to add branded coffee cups or stickers to the background of online videos. (Rembrand recently partnered with The Trade Desk integrating its tech into the company’s buying platform).

They’re far from alone in exploiting the AI space: Seed-stage Nexad gained $6 million around the same time to pipe text ads into AI chats.

The logic, says Franchi, is that companies are “taking bets on media bought and sold in an agentic world.” That’s a forward-looking bet, he admits. “Right now, this is not the way media is bought and sold, but there are clues.”

AI can also help verify returns on ad spend. Attention-metrics firm Adelaide, whose seed extension Aperiam led, is part of a broader rush to ensure that new formats win consumer attention — a key metric for marketers in today’s competitive digital economy.

Opportunity in downturns

Although there’s growing interest in CTV, retail media, AI and measurement that links advertising influence and purchasing behavior, VCs acknowledge that dealmaking is more cautious than in past cycles.

But VCs have never been shy about making bets during market slowdowns, as that’s the position from which they can make the most impact.

“You have to invest in all markets because you really don’t know when the generational companies are built,” Franchi admits. “And they’re often built during downturns.”