Augme Technologies is acquiring fellow mobile marketing company Hipcricket for $44.5 million. The deal reflects what’s likely to be increasing consolidation in the mobile ad space, which is growing quickly, yet remains a small fraction of the wider online advertising arena.
Putting mobile advertising in context, eMarketer has predicted that U.S. mobile ad spending will break the $1 billion mark this year, up 48 percent from 2010 — a drop in the bucket compared to the $26 billion that will be spent online in the U.S. this year.
That ad spending is spread among numerous mobile marketing agencies and since there’s really not that much to go around, expect more consolidation as marketers begin to make more demands of mobile ad services, even as they slowly expand their budgets in that area.
The deal will be comprised of $6 million in cash and $38.5 million in New York-based Augme common stock. In addition, the transaction calls for a twelve-month earn-out payment valued at up to an additional $27.5 million, which may be paid in cash or stock at Augme’s discretion provided that the transaction remains a tax-free reorg. Concurrently with the closing of the acquisition, Augme expects to hire all of Kirkland, Wash.-based Hipcricket’s employees and the current Hipcricket team will continue to service the agency’s existing business. Release