Mobile advertising and data provider
Millennial Media Inc.
) recently received the green signal from the U.S. Federal Trade
Commission (FTC) for the acquisition of privately-held mobile
advertising platform Jumptap, Inc. With the regulatory approval,
the transaction is likely to form a behemoth in its category with
complementary product offerings, operating synergies and
technological collaboration to serve a wide spectrum of customers
across the globe.
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Headquartered in Boston, Jumptap is a premier mobile advertising
platform reaching over 218 million mobile users in the U.S. and
over 439 mobile users globally. It boasts more than 124 million
unique and data-rich profiles, of which about 44 million can be
reached across both mobile and online platforms.
According to market research firm International Data Corporation,
Jumptap was the second-largest advertising platform in the U.S.
with 10.7% market share in 2012 behind Millennia Media at 18%.
Jumptap is an industry pioneer in forging strategic partnerships
with over 20 third-party data providers that has enabled it to
focus on audience-centric advertising program through its 76,000
mobile sites and apps. In addition, to ensure a holistic coverage
of the mobile advertising market, it has issued 55 patents and
another 50 patents are awaiting approval.
In concurrence with the agreement, Jumptap shareholders will
receive approximately 24.6 million shares of Millennial Media,
which is equivalent to approximately 22.5% pro forma ownership
In addition to the stock component, the deal also has a minor
cash component aggregating a maximum of $12 million (based on
Millennial Media's closing share price on Aug 9, 2013). The exact
stock and cash composition will be determined at the closing of
the transaction based upon Millennial Media's share price at that
The Key Takeaways
The product portfolio of the combined entity compliments well and
that is likely to result in economies of scale in the
fast-growing mobile ad market. Jumptap has a strategic presence
in the Real-time bidding (RTB) segment with over 2 billion
impressions per day to deliver app and other performance
campaigns. RTB is a method of selling and buying online display
advertising in real time one ad impression at a time. In
addition, Jumptap brings on board a focused presence in
performance advertising with healthy cross-screen solutions,
intellectual-property portfolio and strong business partnerships
providing third-party data that complements Millennial Media's
first-party data assets.
Millennial Media has over 450 million unique user profiles, which
are utilized by advertisers to target specific ad campaigns. By
integrating Jumptap's third-party data with its indigenous data
sources, the combined company will have relatively enriched data
asset to drive better results for both brand and performance
advertisers. With its tie-up with 24/7 Real Media, Jumptap also
has cross-screen advertising solutions that facilitates
advertisers to run ads across mobile devices and PCs. This gives
Millennial Media a fair pie of TV ad market and extends its
customer reach across the international arena.
Jumptap's patented assets further improve the intellectual
property portfolio of the merged entity. These patents encompass
broad aspects of the delivery and targeting of mobile advertising
and put the combined company in an elite class. In addition,
Jumptap also augment the human capital of the new company with
senior-leadership team and skilled technicians of app developers
mobile advertisers and agencies
, the combined company will provide arguably the largest and
comprehensive audience solutions with unrivalled brand and
performance capabilities. The merged company will deliver
market-leading data, video, rich-media, cross-screen,
programmatic bidding/buying and measurement solutions for an
informative decision-making exercise with better analytics,
relevancy and performance-driven resources.
mobile developers and publishers
, the new entity will offer easier access to a larger pool of
managed, self-service and programmatic tools to monetize
inventory more efficiently and effectively.
Millennial Media had earlier set four priorities for growth
initiatives this year, which included an easier method to buy and
transact on its platform, expanding proprietary data assets,
delivering effective advertising across different mobile devices
and global expansion. The Jumptap acquisition is an effort on
this endeavor. Jumptap is a strategic fit to Millennial Media and
post-integration, the company expects incremental revenues on an
Since its inception in 2006, Millennial Media has created a niche
market through innovation and a diligent focus on mobile
advertising platforms. The business model of the company hinges
upon sophisticated data and technology, solid partnerships with
global media and application developers across all operating
systems, and healthy relationships with leading global brands. We
remain encouraged with the industry consolidation and expect
Millennial Media to reap huge benefits from the acquisition.
Millennial Media has a Zacks Rank #3 (Hold). Other notable
companies in the industry that warrant a look include
MDC Partners Inc.
ABM Industries Incorporated
Publicis Groupe SA
), each carrying a Zacks Rank #2 (Buy).