On Tuesday, Millennial completed a deal in hopes of changing
that, paying $225 million in stock for a one-time competitor,
Jumptap. Once a mobile ad network, Jumptap
changed course two years ago to embrace an automated approach,
reinventing itself as firm selling direct-response advertisers and
agencies tools to buy mobile ads in real-time auctions.
Wall Street wasn't exactly convinced: Millennial Media's shares
dropped another 19% the day after the deal.
But the bet here is that Milllennial can can transform from a
company built to place brand ads on mobile devices to one that can
power the buy-side of advertising, dominated by lower-end direct
response and app install advertisers.
Mollie Spilman, the former Yahoo exec who's now EVP of global
sales at Millennial, said the deal allows Millennial not just to
sell ads, but to help developers and publishers make money from
their web sites and apps. "If we can help to better monetize their
inventory though manual and automated, that's what we need to do,"
she said.
Millennial dipped a toe into programmatic when it bought
Jumptap's smaller competitors Metaresolver
earlier this year. But Ernie Cormier, CEO of mobile ad exchange
Nexage, said he had "never seen evidence of [Metaresolver] being
used" whereas he called Jumptap "a leader" in automated mobile ad
buying. Mr. Payne said Jumptap extends Millennial's ability to buy
ads outside of its network through other exchanges like MoPub and Nexage.
Based on research firm IDC's 2012
mobile revenue numbers, Millennial Media plus Jumptap would
leapfrog Facebook and Pandora to become the
number-two mobile ad company behind Google (and by only $2
million). However, given how fast Facebook is growing in mobile, don't expect them
to be there for long.
"The combination of Jumptap's data and [automated ad buying
tools] and Millennial's brand advertising business creates for the
first time in the mobile [automated buying] market an 800-pound
gorilla on the [buy] side," said Asher Delug, CEO of mobile ad
network Airpush.
Mobile exchange
However Millennial's ambitions extend beyond the buy side. In the
fourth quarter, Millennial is slated to launch a mobile ad exchange
that would function as a marketplace for automated ad buying
companies like Jumptap to bid on publishers' and app developers'
mobile inventory in real time. If mobile advertising were Wall
Street, Millennial Media would own both the New York Stock Exchange
and one of its largest brokerage firms.
Millennial had been planning to roll out the exchange in the
third quarter but was stretched thin by performing due diligence on
the Jumptap deal, Ms. Spilman said. "We have all the pieces, but we
just really want to be thoughtful and don't want to overpromise
when we deliver."
Ms. Spilman acknowledged that buyers may question whether
Millennial's exchange may favor ad bids placed through
Millennial-owned Jumptap. "We know that there has to be pure
transparency, and there can't be preference given," she said,
referring to Yahoo buying Right Media's inventory as an example
that the dynamic can work.
"How much will they be willing to spend on an exchange where one
buyer you're competing with is owned by the company that owns the
exchange," said Mr. Cormier of his company's upcoming
competitor.
With an ad exchange and Jumptap, Millennial could erect the
mobile version of that automated advertising monopoly, though not
everyone agrees.
"I don't think there are any programmatic buyers who buy on only
one exchange because there's no exchange with a lock on all
inventory," said Mr. Cormier. "If you're going to only buy on
Millennial's exchange, I don't think the reach will be
sufficient."
