At first I thought it was a joke, one that only digital advertising people would laugh at sardonically. But as the news of MoPub’s acquisition spread across the tech media echoplex, one question kept rolling through my mind: what the hell does Twitter want with a mobile ad server, mediation platform and enabler of mobile RTB for publishers?
No stranger to acquisitions, just a few weeks ago the mighty microblogger snatched up social TV analytical stalwart Trendrr, bolstering the previous acquisition of BlueFin Labs. But MoPub represents pretty new territory. Is there really an allure to monetizing premium publisher mobile inventory, particularly through programmatic channels? Is Twitter ready to head off the 140-character reservation?
Apparently – in a blog post, MoPub CEO and cofounder Jim Payne reported that Twitter is investing in MoPub’s core business. “It’s important to underscore that our commitment to you, the publisher, will not change,” he wrote. “In fact, it will be strengthened.” To shore up that statement, the nearly 100-strong MoPub team is coming aboard Twitter with Payne becoming a VP of revenue reporting into Twitter revenue-meister Adam Bain.
Citing an “immense overlap” between MoPub and Twitter’s advertising capabilities, Twitter VP of Revenue Product Kevin Weil suggested that the deal worked both ways, with MoPub’s tech injecting some real-time fury into Twitter’s ad offerings. In addition, Twitter sees this as an opportunity to push native advertising initiatives (tried and true as well as new) across a wealth of premium publishers.
“The two major trends in the ad world right now are the rapid consumer shift toward mobile usage, and the industry shift to programmatic buying,” Weil writes on the company blog. “Twitter sits at the intersection of these, and we think by bringing MoPub’s technology and team to Twitter, we can further drive these trends for the benefit of consumers, advertisers, and agencies.”
So while the announcement came out of left field for me, the merger ties together just about every buzzed about trend of the last year or so: mobile, programmatic, native, consolidation…
Start at Mobile
Similar to Facebook, mobile has been a huge boon to Twitter’s revenue efforts. According to eMarketer, mobile was to account for $811.3 million of Twitter’s predicted 2015 revenue of $1.33. With MoPub in the picture, that certainly changes – consider that in May the company reported a $100 million revenue run rate. (Twitter is also reportedly eyeing an IPO in 2014.)
The mobile RTB space is blossoming for a variety of reasons – mobile inventory isn’t valuable, it’s an afterthought of direct sales… Yes, most mobile display is basically remnant. But similar to the development of the desktop display world, targeted advertising via device identifiers will boost monetization efforts.
And what’s great for targeting? Data! Turns out Twitter has a great deal of that, from location to intent. Facebook has long claimed it has no plans to jumpstart an ad network – much to the disbelief of the ad tech community and the disappointment of investors. But by buying MoPub, Twitter now has a rather simple way to leverage all its sweet, sweet data beyond its borders.
Next, there’s the question of units. Banners do and don’t work in mobile – yes, users find them particularly annoying on a small screen (news flash: users will always say they hate advertising), but with such limited space, they’re hard to ignore. The argument (which BuzzFeed made at our OPS Mobileconference in July) is that “native” – units custom-built by publishers for advertisers – are far more effective. However, scalability rears its ugly head as custom units take time to build.
Twitter, though, has managed to scale native advertising products such as promoted posts and tweets across its social network. It would seem the company have the tools to scale native-esque advertising across the MoPub pub landscape.
Gently Tapping the Consolidation Bell
Finally, it seems like every few months the ad tech media starts ringing its bell and shouting, “Consolidation is coming!” Yet the various LUMAscapes seem as crowded as ever, or maybe even more crowded.
Not being a big fan of bell-ringing, I’m going to put it this way: Consolidation has come not with a bang, but not with a whimper either. Maybe more of a shrug and a “That sounds about right.” We’ve had a few head-turning ad tech acquisitions this summer: AOL’s acquisition of Adap.tv and Millennial Media picking up old rival JumpTap (apparently for a steal).
In addition, LUMA’s Amanda Bicofsky pointed out in her OPS Markets keynote that several ad tech outfits have shuttered this year – the one that caught my eye most recently was QuadrantONE. The venture capital hasn’t completely dried up for the ad tech space (Collective recently nailed $20 million in a Series C round) but it’s not flowing like it did a few years ago.
I think Twitter-MoPub is a bellwether showing consolidation is seriously ramping up. MoPub was no small fry – an impressive ante for Twitter to join the ad tech game. At Tech Crunch, Payne compared it to Google’s acquisition of DoubleClick. Deal Twitter in, because they’re now a player at the table.
The gap between the viable vendors and the struggling stragglers is fast widening. It’s a sign that the point solutions littering the LUMAscapes better hope they get scooped up by the bigger guys before they’re forced to close their doors when the investment well runs dry. Come OPS time – Sept. 26 at 82 Mercer – I’m curious if our closing VC Throwdown group will agree…
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