Will Impact go public?
Martech Record's back-of-the-envelope estimate of the size of the U.S. affiliate market is $56B.
Martech Record estimates the current market for affiliate tracking, reporting and payment tech is $424M, with the potential to grow to $2.29B in five years.
Impact has made outward indications they are preparing to go public via hiring, and Martech Record's estimate of their value places them within range of an IPO.
Here is something odd: no one really knows how big the affiliate market is. There is an oft-cited report by Forester, commissioned by Rakuten from 2016. It is old and potentially biased, but that Rakuten marketing team deserves a slow clap because it is still the only data point we have.
Maybe there is a good reason for this: nobody knows how to define the affiliate industry.
Does the affiliate marketing market include any partnership that can be tracked, reported and paid on? Or is it simply the evolution of the coupon industry?
Most industry veterans were surprised to hear our investor panel declare that the transformation of the industry is only in its first inning.
But that means the industry itself must be much bigger than coupons or deals.
Still, there is no guarantee that affiliate tech and services will be the winner. What is to stop other channels from managing payments to influencers or social commerce campaigns?
We will attempt to value Impact because it is a proxy for the future value of the affiliate market and an indicator of where the market is going.
Martech Record’s rough estimate of Impact’s revenue is somewhere between $60M-$90. That number includes recent acquisitions and is based largely on conversations with industry insiders and financial service professionals. For the purpose of this back-of-the-envelope process, we’ll split the difference and say $75M.
But their valuation has less to do with their current revenue than with your view of their potential for growth.
The inputs to determining Impact’s value are: Revenue x a number we choose that reflects their future growth.
Investors interviewed by Martech Record shared that revenue multiples for similar martech companies are currently somewhere between 3x and 16x, implying a range of $225M-$1.2B.
So which is it? $225M or $1.2B?
A deli in New Jersey that generated only $13K in annual revenue is valued at over $2 billion and Gamestop is worth (still!) 30x what it was a year ago. None of us know what value means anymore.
This is a fun exercise one would do in a case interview. We make assumptions based on experience but no first-hand knowledge. Don’t put this in your investor deck.
To determine growth we need to know two things:
Impact’s addressable market.
How much of that market Impact can capture.
First, how big is the current affiliate market?
In 2020, U.S. ecommerce revenue (excluding Amazon) was $565B, according to DigitalCommerce360 and