The crowded ad-tech landscape just got a tad bit thinner.
DG, a traditional-TV ad-delivery company that moved into the online-ad space with last year's acquisition of MediaMind, has acquired semantic ad-targeting startup Peer39 in a deal that could reach $15.5 million in cash and stock.
New York-based Peer39 will get $10 million up front in addition to about 357,000 shares of DG stock. The acquisition also includes a $2.3 million earn-out.
Founded in 2006, Peer39 has raised $27 million. So, no, the deal is not a win for its investors and, at the same time, gives credence to what many ad-tech observers have pointed out over the past couple of years: There's a plethora of venture capital being thrown at businesses that aren't actually businesses; at worst, they're just features and, at best, products.
Peer39 seems to be the latter, and DG will treat it as such, integrating it into the MediaMind online-ad-serving platform. Peer39 will also continue to make its targeting technology available on demand-side platforms and ad exchanges.
"As things have gotten more mature in the [real-time bidding] business, it became clear to me that we needed to be inside a larger organization that could contribute even more rapid growth," said Peer39 CEO Andy Ellenthal, who will become DG's exec VP-sales and ad operations for both the company's TV and online divisions (Peer39's staff of 37 will join MediaMind, Mr. Ellenthal said).
Peer39 provides data in real-time ad marketplaces that helps advertisers target their ads based on the content of a webpage, not the user looking at the page. The company doesn't target through cookies but uses a semantic technology that aims to uncover what the content on a specific webpage is about and whether that content is brand-safe, as well as the quality of the ad-unit placement on the page.
MediaMind books more than 70% of its revenue overseas, including a good chunk in Europe, where online privacy laws are typically stricter than in the U.S. DG CEO Neil Nguyen said he was attracted to a company that could provide a level of targeting to ad buyers without tracking specific web users.
Mr. Nguyen said the acquisition is just one of the moves that he hopes will help DG transition from largely a maker of the tech plumbing for delivering the creative used in TV ads to a legit online-ad platform that helps bridge the divide between TV and online-ad buying. In fact, Mr. Nguyen has his eyes set on the top.
"It's becoming clear we're assembling all the pieces ... and a very competitive offering to Google," Mr. Nguyen said.
Still, the public market may not yet believe that . Investors have pummeled DG's stock price in the past year, pushing it down to about $9 today from $37 last May. The company had also been a rumored acquisition target .
"A lot of our shareholder base have bought into DG historically as a TV-ad server and the online space, while interesting, does not have the same economic profile," Mr. Nguyen said. "The market doesn't like a transition story, and we're part of it."