The outright purchase of these three mobile ad companies by bigger, more established IT players over the last two months portends what will surely be a slew of accelerated takeovers, mobile ad executives told VentureBeat.
The mobile advertising outfits that become acquisition targets will, like these three, have the proven capability to scale campaigns on multiple devices.
Exact purchase prices for these companies haven’t been publicly disclosed. Sources told VentureBeat that Yahoo paid north of $300 million, but it’s not known what the cash and stock breakdown is. Opera, which specializes in video ad delivery, is said to have paid more than $350 million in cash and stock for AdColony. And Twitter coughed up around $100 million for TapCommerce, reports said, but the deal reportedly hasn’t been finalized.
But the data that companies like these have acquired will continue to drive buyouts, even as companies like Google and Facebook are relying more on their own in-house analytics capabilities.
Some of that data is incredibly detailed, down to individual consumers’ hair color, shoe size, and vacation preferences, for example.
“Flurry has lots of data that Yahoo wanted to grab. The question here is what was the buying price,” said Guillaume Lelait, a vice president for U.S. operations at Fetch, a mobile ad agency that is on track to pull in revenue of $130 million this year.
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Peter Hamilton, chief of mobile analytic stalwart Tune, concurs with the premise. In fact, Hamilton and his team in Seattle spend part of their week fending off buyout offers from many of the big IT outfits, all of whom have household names, Hamilton said. The Yahoo-Flurry deal is win-win, he said.
“A ridiculous number of apps have Flurry’s SDKs installed in them. The deal shows that major players need to be in the mobile thing, like Google, Amazon, and Facebook. Yahoo is quickly evolving in this direction, and this deal is its ‘big hello’ into the mobile ad ecosystem,” Hamilton said.
The mobile ad market, and the third-party mobile analytic outfits that help marketers target their ads, is wide open and ripe for the taking. The sector grew 105 percent in 2013 to a total of $17.9 billion, and research firm eMarketer expects that tally to grow to over $30 billion by the end of 2014.
Google dominates the market, accounting for nearly 50 percent of the mobile ad revenue haul, but Facebook is catching up fast, with 17.5 percent in 2013 and rising to 21.7 percent in 2014, eMarketer says. Facebook and Google account for two-thirds of the mobile ad spend.
Before Yahoo bought it yesterday, Flurry had already established itself as a standout for its mobile analytic capabilities, which enable ad companies and brands to target campaigns with the precision of laser guided bomb, all without the benefits of cookies.
“Their analytic solutions are used by everybody. And the other thing is, they have a massive footprint in the space,” Hamilton said. Tune, formerly known as HasOffers, did $19 million in business last year, Hamilton said.
In a release trumpeting the deal, Scott Burke, Yahoo’s senior vice president for ad technology, said:
“Flurry’s success is the result of years of committed investment by a passionate team to create an indispensable platform for mobile developers. We want to harness our collective innovative spirit and bolster the mobile ecosystem by providing developers the analytics and monetization solutions to drive their success.”
Look at the Flurry-Yahoo deal this way. Launched in San Francisco in 2005, Flurry has chalked up an enviable track record. More than 170,000 app developers use Flurry, and the tech firm’s SDK tracks more than 150 billion sessions every month. Flurry gives Yahoo an instant relationship with a huge number of the people and companies responsible for the mobile-app economy.
Flurry has proven a valuable conduit for companies launching advertising campaigns in the mobile arena. A few of the numbers it released Tuesday show that Flurry sees app activity from 1.4 billion devices monthly; sees 5.5 billion app sessions per day; that Flurry Analytics is in seven apps per device on average; and that 8,000 publishers monetize with Flurry.
The issue here, of course, is whether Yahoo can successfully integrate Flurry into its growing family, which hasn’t always gone so well for the acquisition-hungry company.
Think of what happened to Flickr, which I talked about in length about with Flickr co-founder Stewart Butterfield. Read an interesting take on that here.
“Flurry are able to make ads for mobile. Facebook has proven themselves doing it. And Yahoo has the need to get on the mobile program. Their desktop business is slowing. Flurry is a very strong brand in the ecosystem, and now, let’s see if Yahoo can get something out of it,” Lelait said.
Asked if he believed the Yahoo-Flurry deal would usher in an accelerated era of buyouts in mobile, Charles Manning, the chief of mobile analytic outfit Kochava, was more circumspect. But at the very least, he said, Yahoo stands to gain from the acquisition.
“It could do that, sure,” Manning said. “No question Yahoo is bullish on mobile, and the deal is certainly interesting. What this does is give Yahoo a strong ad network. So yes, this is a key consolidation in the mobile ad ecosystem.”
If the deal goes sideways, Manning said, it could have potentially negative repercussions for other deals theoretically in the pipe. But Manning doesn’t see that happening.
“Yahoo is giving strong attention to making this a success. Execution speaks volumes in resulting revenues. But it could hurt them if they don’t take advantage of the strong momentum in mobile,” he said.
“There’s a saying: buying a company is easy to do, but hard to integrate,” he said.
A spokesperson for Yahoo declined comment when asked about financial specifics of the deal.