LUMA’s Q1 Market Report shows a pull back in M&A activity, with total deal volume across the digital media and marketing landscape down 15% quarter-over-quarter and 11% year-over-year. Adtech specifically felt the squeeze on scaled deals (transactions over $100 million), dropping from six in Q1 2025 to just a single scaled deal in Q1 2026.
At first glance, this may look like a typical market slowdown. But, what we’re seeing is less about reduced activity and more about a shift in how the market operates.
Deals are being reshaped by macroeconomic uncertainty, geopolitical pressure, and evolving expectations. Yes, fewer deals may be getting done. But, the ones happening paint a much bigger picture.
Large transactions are happening, but the bar has risen. Buyers are becoming more selective and strategic, prioritizing the ones that promise clear differentiation and long-term value over opportunistic growth. The focus has shifted from doing more deals to doing the right deals.
Why buyers become this selective, visibility and brand positioning become your most valuable assets. If a company is looking toward an eventual exit or acquisition, the PR strategy must shift from purely announcing product updates to building a sustained, ironclad narrative of differentiation. If you look like every other platform in the stack, you won’t get the meeting. Our guidance at DBC would be to increase focus on thought leadership that proves you are solving unique, high-growth problems (like retail media or CTV) rather than just participating in them.
The Public Market Disconnect
At the same time, public markets tell a conflicting story. Stocks declined across the industry in Q1, with the LUMA.A (Ad Tech) and LUMA.M (MarTech) indices falling 21% and 27% respectively. This occurred despite many companies reporting strong Q4 earnings. In fact, LUMA found that the majority actually met or exceeded expectations.
The disconnect reflects a market reacting to uncertainty over actual performance. Escalating geopolitical tensions and macroeconomic headwinds are weighing on sentiment, dragging down valuations even for companies that are performing well.
This validates the critical role of financial PR and corporate communications. When the market is punishing the top performers, the narrative matters just as much as the spreadsheet. Messaging emphasizing resilience, disciplined execution and long-term vision help insulate from broader market anxieties.
AI Remains the Undeniable Catalyst
Unsurprisingly, the one area that hasn’t slowed down is AI.
Deals are still flowing into AI-driven companies at scale, as seen with Runway’s $315 million Series E and OpenAI’s $122 billion funding round. Rather than pulling back, buyers and investors are narrowing in on what they believe will define the next phase of growth. As AI becomes central to workflows and valuation, it’s also becoming a deciding factor in where buyers place their bets. Furthermore, strategics are actively acquiring AI-driven capabilities to integrate into their platforms.
AI is the biggest buzzword, which means it’s also the quickest way to sound like everyone else. It’s necessary to cut through the AI jargon slop. It isn’t enough to say “we use AI” but to explicitly prove how AI drives quantifiable efficiency and outcomes.
The Widening Gap and the Path Forward
Another trend that continued into Q1 is the market’s varying definitions of success. While the “growth at all costs” mindset has been fading for a while, there is now a clear shift. The focus has moved to efficiency, profitability, and disciplined execution as buyers look for sustainable growth, not just top-line expansion.
As a result, there is a widening gap between top performers and the rest of the market. Companies with strong fundamentals and clear strategies are standing out, while those lacking differentiation or a clear path to profitability fall behind.
When uncertainty begins to (hopefully) stabilize, M&A will likely pick back up, but it won’t look the same. The next phase will be more selective, more strategic, and more focused on long-term value creation. AI will stay at the center, and differentiation will matter more than ever.
What we are seeing isn’t a slowdown–its a reset. Companies that adapt their strategy, sharpen their positioning, and align their public narratives with with where the market is going are better poised to come out on top.