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Start-ups face digital advertising squeeze

Activity in the online advertising space has been fast and furious with the big guys—such as Facebook, AOL and Yahoo—scooping up smaller rivals.

Mergers and acquisitions in the digital media space have risen 32 percent year over year, according to investment bank Coady Diemar Partners. There were 100 deals in the sector in 2014 up from 76 in 2013 and the dollar value tripled from $2.3 billion to $7.5 billion, Coady Diemar reported.

Justin Solomon | CNBC

The big media companies are buying smaller firms in order to build out on their own online ad offerings, claiming to provide everything an online marketer would need in one place, while the start-ups claim to be more nimble than their large rivals, reports The Wall Street Journal.

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The market for digital advertising remains one of the highest growth opportunities, with spending forecast to almost double to nearly $80 billion from 2013 to 2017, according to investment bank, Woodside Capital Partners.

Colin Knudsen, managing director of Coady Diemar, adds that as advertising becomes increasing prevalent and as digital ad channels continue their rapid growth, the consolidation of the sector should continue and perhaps increase in terms of number and dollar value of deals.