June 13th, 2011
Almost exactly one year after the acquisition of Demand Side Platform Invite Media, Google announced an agreement to acquire Admeld, a leading Sell Side Platform. With this transaction, Google will extend its presence in the fiercely competitive digital advertising ecosystem with capabilities geared towards premium publishers.
LUMA Partners discussed the concept with Google and later represented Admeld in the transaction, which remains subject to US regulatory approval.
While not disclosed, most of the press has run with headlines touting a $400 million purchase price for the transaction. Assuming this is at least ballpark, it says a lot about the market for advertising technology. Here are some points to consider:
1. Real time media buying is real and valuable. There has been some debate of late regarding the RTB phenomenon – whether it is a fad or a long-term shift in the market and whether it adds real value. This acquisition should squelch that debate – as we point out in the SCIENCE-ification of Media presentation, there’s no going back.
2. Premium is where its at. Now that various targeting and optimization technologies are being perfected on remnant inventory (the only inventory publishers initially made available for experimentation), its time to focus on improving premium guaranteed inventory monetization. Admeld is a leader in these efforts.
3. Leadership matters. There are many companies in many categories in the display ecosystem (and video, social, mobile, commerce, etc.). It pays to have a leadership position.
4. Being bought, not sold matters. The best companies do not run banker processes that supposedly yield the “highest bidder”. Conversely, we believe that for dynamic technology companies such approaches actually sub-optimize. It’s adverse selection. This is the underlying premise of LUMA Partners’ go-to-market strategy. And it’s working – just look at our track record of successful deals that didn’t involve running a process.