Millennial And Jumptap
Millennial Media, the independent leader in mobile advertising and data, today announced that it has signed a definitive agreement to acquire privately-held, Boston-based Jumptap in a predominantly stock transaction. Under the terms of the agreement, based on Millennial Media’s closing share price on August 9, 2013, Jumptap shareholders will receive approximately 24.6 million shares of Millennial Media, corresponding to approximately 22.5% pro forma ownership post transaction.
While this a highly dilutive acquisition at 22.5% (and the market is punishing them for it; down 18% today), I think it’s one that Millennial needed to make. Millennial has done well on the brand side of the business but (to date) has not cracked the performance advertising side. Jumptap gives them that edge. They have partnered with some 20 different third party data providers which gives them a leg up on RTB and programmatic buying. Overall, they complement each other very nicely.
But let’s not kid ourselves either. This deal is really about scale.
According to IDC, among ad networks Millennial ranks #2 and Jumptap #4 in terms of revenue where Google (AdMob) and Apple (iAds) were #1 and #3.
The Jumptap deal gives Millennial a reported combined 28.7% of the market share to top out Google/AdMob:
But that’s just among the mobile ad networks, who are steadily losing market share to publishers like Facebook, Pandora and Twitter. Facebook has led the way here with their meteoric rise in mobile. As publishers get more scale and targeting capabilities, advertisers are less inclined to go through networks. Who wants to pay a 30% cut when you can go direct?
So in my opinion, this Millennial/Jumptap deal is about fending off mobile publishers just as much as it is the other ad networks. The increased scale alone will get them a lot more looks from advertisers.
The good news here is the pie is big enough for a lot of players. The mobile advertising market is expected to grow to $11.4B this year according to Gartner as mobile ad spends catch up to % of time spent. Big enough to be bullish on Millennial if they can execute this transition well.