Just a month after installing ex-Yahoo (NSDQ: YHOO) Right Media head Ramsey McGrory as CEO, content distribution engine Clearspring has acquired social data specialist XGraph. The deal is meant to build Clearspring’s existing social reach on one of the primary trends influencing online advertising right now: mining the social graph for targeted advertising.
The deal, the amount of which was undisclosed — though it involved equity as well as cash — follows through on a plan Clearspring’s former CEO and co-founder Hooman Radfar (he’s now executive chairman) told paidContent about in May, when the company raised a huge $20 million round: that is, to develop and market more tools around social media and real-time data for publishers and advertisers.
The company is generally known as a provider of content and analysis of content and advertising that are distributed through social media tools and apps. Among its various analytics services, Clearspring’s main product is the AddThis sharing tool, an orange box with white “plus sign” icon that is available on more than 10 million websites globally. The tool lets users to share content with people they know through more than 300 different social networks in 70 languages.
Although behavioral targeting is considered the holy grail in some ways, many in the industry also recognize that it may be terrific for creating models based on what people have previously done on the web, it doesn’t necessarily mean these services can accurately predict when a users’ activity may change. Instead, the social graph is often considered just as essential in understanding consumers’ online behavior.
To some extent, companies as various as RadiumOne, SocialTwist, Lotame and Media6degrees are among the many companies that have been drawn to positioning themselves as social ad targeters. Given the growing crowd in the social marketing arena, McGrory told paidContent that Clearspring wanted to get ahead of the consolidation that will very likely take place over the next year.
Clearspring and XGraph have been working together for two years. While the deal had been put in motion before McGrory arrived at Clearspring last month, completing the purchase of XGraph one of the first things he concentrated on.
“We’re entering a period right now that looks a lot like 2007, when all there was a wave of consolidation in the ad tech marketplace: Google bought DoubleClick, WPP bought 24/7 Real Media, Microsoft had bought aQuantive and AdECN. Over the past few months, you’ve seen announcements like the creation of a remnant ad sales consortium among AOL, Yahoo and MSN. When you have dozens of marketplaces operating at the same time, having the data in-house, as opposed to outside, becomes crucial. The personalization of content, as well as targeted advertising, is now essential to media companies’ operations.”
Three-year-old XGraph, which raised about $3.75 million first round last year, Venturebeat reported at the time, will bring all its 15 staffers to the 70-person Clearspring, including CEO Key Compton, who will take on a new role within his company’s new owner. It will retain the XGraph brand, for at least the time being.