U.S. ad tech company Tremor Video is selling its “demand-side platform” to Israel-based mobile advertising firm Taptica for an enterprise value of $50 million continuing a raft of consolidation in a sector facing stiff online competition from Google and Facebook.

Demand-side platforms help advertisers and their ad agencies buy online video ads using automated processes. Tremor Video is retaining its “supply side platform,” which helps online publishers manage and sell their video advertising inventory.

The $50 million price includes around $22.5 million of working capital, which mainly comprises accounts receivable, as Taptica looks to maintain Tremor Video’s relationships with advertising agencies and marketers.

Taptica CEO Hagai Tal said the company had looked at other businesses in the sector as it looks to expand its presence geographically and extend its offering in the media-buying space, but it chose Tremor Video due to its scale.

“We are seeing the budget that traditionally went to TV shifting into the digital area and we thought it was the obvious bet for us to grow,” Mr. Tal said.

Tremor Video CEO Mark Zagorski, who assumed the role on July 10 this year, said his company will now become more focused, rather than trying to offer services to both buyers and sellers.

Mr. Zagorski said its sell-side video platform grew by around 83% in the last 12 months, with net revenue of around $34 million and a gross margin of around 91% in that period.

“It was a challenge to manage two sides of the business with the kind of scale we had, so we decided to focus on the sell-side where we had solid technology,” Mr. Zagorski said, adding that Tremor Video will have access to about $80 million in capital after the sale, allowing it to continue to invest in its technology, particularly in the area of connected-TV video advertising.

The acquisition marks the latest in a wave of consolidation within the ad tech sector. Notable deals this year have included Sizmek’s acquisition of Rocket Fuel for $125.5 million last month; Dutch telecommunications company Altice acquiring Teads for an enterprise value of up to €285 million ($307 million) in March this year; and Amobee, Singapore telecommunications company Singtel’s digital advertising division, acquiring Turn for an enterprise value of $310 million in February.

The online advertising space is dominated by the two largest players. Google and Facebook collected 77 cents of each new dollar spent on digital advertising in the U.S. last year, according to estimates from research firm eMarketer.

The majority of public ad tech firms have underperformed on the public markets, having struggled to convince Wall Street of their long-term potential. In the three-month period ended June 6, 2017, ad tech stocks were down an average of 7%, if you exclude the sector’s star performers, Criteo and The Trade Desk, according to data compiled by investment bank Luma Partners.

Tremor Video had been weathering a transition from being a video ad network that relied mostly on direct sales to becoming a “programmatic” video marketplace. The company went public at a $10-a-share price in 2013. Its stock closed at $2.23 on Friday.

Tremor Video reported a 32% lift in revenue to $48.9 million in the quarter ended June 30, 2017.

Taptica is listed on London’s junior AIM market. The company reported a 66% lift in revenue to $125.9 million in the year ended December 31, 2016, according to its latest annual report.

Last month, Taptica announced it is acquiring a majority stake in Japanese mobile ad company Adinnovation for a consideration of up to $5.7 million in cash.

Write to Lara O’Reilly at lara.o'reilly@wsj.com