MediaMath built one of the industry's first demand-side platforms, which allow advertisers to target online display ads across the web in real time. Along the way, it built a services team that operated much like a media agency, so much so that it's spinning that unit out into a new media agency called Kepler Group.
Nine of MediaMath's current clients will become Kepler Group clients, including Kayak, the travel search company. Most of these advertisers will continue to license technology directly from MediaMath and use Kepler to plan, execute, optimize and provide analytics on their campaigns. Kepler will focus on display advertising to start, but will get into other digital channels as clients ask for it.
MediaMath will hold a minority stake in the six-person startup, which will be run by Rick Greenberg, formerly MediaMath's SVP and head of sales in the Americas.
Kepler will focus on programmatic buying -- or the real-time buying of ad impressions on ad exchanges aimed at targeting segments of web users across different websites. So-called demand-side platforms are typically used to execute these buys and it should be no surprise that Kepler will use MediaMath's technology to buy ad inventory for its clients.
Kayak spent nearly $3.8 million on online display advertising in 2011, up 101% from 2010. Kayak also spent more than $19 million on cable TV and $8 million on network TV in 2011, according to Kantar Media. It is also a big search advertiser.
The change comes as MediaMath says it found itself developing more direct relationships with advertisers that looked to MediaMath for strategy and consulting work above and beyond normal account-services operations.
"It got to the point where MediaMath proper wasn't going to continue to ... invest into that higher degree of service, but it made a ton of sense for a new entity," said Joe Zawadzki, MediaMath's CEO.
Mr. Zawadzki also said it could help increase MediaMath's valuation since valuation multiples for software businesses are typically higher than those for service businesses. "I think there's probably a secondary benefit in terms of that the market would view the business as pure software-as-a-service-based revenue which tends to have a higher multiple," he said.
MediaMath has 140 employees and has raised $30.6 million in funding from Safeguard Scientifics, Catalyst Investors, Observatory Capital, QED Investors, SJF Ventures and European Founders Fund.
The agency's name is a nod to Johannes Kepler, the German astronomer who analyzed data to form his laws of planetary motion. Kepler Group's six founding employees own the majority of the company, Mr. Zawadzki said. They expect to move into their own office on June 1.
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