A year after Google (NSDQ: GOOG) spent $70 million to buy demand side platform Invite Media, the search giant is now building up the other side of the ad exchange equation as it is buying supply-side platform Admeld for $400 million, according to Techcrunch, which cited unidentified sources. Google declined to comment. Sources tell paidContent that the deal is in the process of being completed.
Admeld apparently spurned a previous Google offer of between $150 and $200 million in February, as it rejected it as too low, Business Insider reported at the time.
But with the rise of real-time bidding and exchanges, Google certainly needed a newer publisher option to buttress its Doubleclick for Publishers service and balance out Invite Media, which appeals to agencies and advertisers as an on-ramp to exchange bidding platforms.
The deal follows big moves by Admeld’s larger rivals in the supply side and yield optimization business, PubMatic and The Rubicon Project.
Last month, Palo Alto-based PubMatic acquired ReviNet, a smaller publisher ad optimizer. The deal extended PubMatic’s reach to publishers that ReviNet has established relationships with, such as The Christian Science Monitor, Dallas newspaper owner A.H. Belo (NYSE: AHC), The Boston Herald and The Sporting News.
Meanwhile, Rubicon has spent the past few months building up its technology side-including adding roughly 100 engineers and product developers with its acquisition of News Corp.’s Fox Audience Network last fall-and now it’s concentrating on its ad sales side with three executive roles, including a new chief revenue officer, Nick Hulse, who joined the Los Angeles company from iPass, a provider of SaaS mobile services for publishers. Rounding out the realigned sales team is Bill Harries as VP of sales operations and Bill McHargue as VP of North American Sales, who was named to that post in December after joining from e-mail marketer StrongMail Systems.
Compared to the dozens of DSPs that aid ad agencies and marketers take advantage of networks and exchanges, the pool of supply-side companies have remained fairly limited to PubMatic, AdMeld, The Rubicon Project.
All three are at varying levels of expansion as publishers begin to reluctantly embrace real-time bidding. The reluctance is due to the not-unreasonable fear that by allowing more of their advertising inventory to be sold via exchanges, they erode the value of their direct sales-i.e., premium inventory. After all, why should an automotives marketer pay higher CPMs for a premium placement after haggling with a publisher’s salesperson when they could just try to get decent placement for a fraction of the price through a real-time bid?
Well, publishers are increasingly facing very little choice. Advertisers and agencies that they have forged relationships with — and depend on to support their content — are funneling more of their spending through trading desks, DSPs and exchanges. Therefore, publishers have begun to turn to SSPs over the past few years to help protect their pricing.
Given the trends bringing more publishers to the RTB/exchange table, the SSPs are likely to be more in demand than in past years. And that will likely mean that the established players will be looking for more acquisitions.
Last year, New York-based Admeld raised $15 million last year. The company has raised a total of $30 million since opening its doors almost four years ago. The last round was led by Norwest Venture Partners, with Time Warner (NYSE: TWX) Investments also participating. They were joined by New York-based AdMeld’s previous backers, Spark Capital and Foundry Group.
News of Admeld being acquired by Google was greeted with a good deal of interest by competitors. Shortly after the deal was reported, Rubicon CEO Frank Addante put out a statement offering “all existing AdMeld customers 90 days of free service.”
In addition, Addante weighed in on what the deal would mean for the marketplace in which the companies operate: “The Rubicon Project and Admeld used to be in the same business. We have remained committed to our vision of providing a platform that is designed to benefit publishers, and an open transparent market. Admeld veered off to being mostly an RTB arbitrageur, buying inventory at low prices from publishers and selling it for higher prices to advertisers while keeping the spread for themselves – without giving any transparency into this practice to publishers. This is bad for publishers because they lose revenue and face new channel conflict. This is very similar to how Google used DoubleClick to get first look at the impression and then arbitrage publisher’s inventory through Google AdEx. This acquisition and this type of business model is good for Google, but bad for publishers.”
It’s safe to assume that deal or no deal, Admeld and Google feel differently, and once the deal is made public, the companies can be expected to offer a defense to that view.