Millennial Media announced on Tuesday that it will acquire competitor Jumptap in a stock transaction worth approximately US$225 million. Under the terms of the agreement, Jumptap shareholders will receive approximately 24.6 million shares of Millennial Media.
The combined company will be able to offer a number of services in this space, including targeting, video, rich-media, cross-screen, programmatic bidding/buying and measurement products. These campaigns and services will be able to run across a variety of different screens.
In short, the deal will bolster Millennial’s efforts to make further inroads in the mobile advertising space by expanding the range and depth of marketing services.
This deal “will accelerate the progress we are already making,” promised Paul Palmieri, Millennial’s president and CEO, in a conference call on Tuesday. “It will make it easier [for customers] to buy and transact on our platform.”
The company will also be able to “deliver effective advertising across many mobile devices,” he said.
Millennial did not respond to our request for further details.
An Industry Shift
For the industry the deal is telling as well, pointing to a shift in the way digital advertising is approaching the market.
“The acquisition shows how fast the pendulum has swung towards programmatic as the strategic technology for advertising, and as the best method to integrate first- and third-party data, including CRM data,” said Victor Milligan, chief marketing officer forNexage.
“Brands and agencies are increasingly looking to the efficiency and targeting value of mobile programmatic markets for top-of-funnel and CRM operations,” Milligan told CRM Buyer.
A Lackluster Report
Millennial’s shareholders, however, appeared to be less than impressed with the long-term potential of the transaction — the company’s shares dropped about 19 percent the following trading day.
Of course, the company also announced less-than-stellar earnings as it unveiled news of the deal, which may well have contributed to the run on the company.
The company reported a net loss of $3.1 million for the second quarter of 2013, compared with net loss of $2.2 million for the second quarter of 2012.
Revenues increased to $57 million from $39.4 million for the second quarter of 2012, representing a year-over-year increase of 45 percent but still less than the $59.2 million analysts had been expecting.
Nevertheless, investor materials distributed by Millennial suggest the company is hoping to leverage the two companies’ complementary resources to wring out some economies of scale when the deal is complete. The company projects it will realize up to $25 million in annual savings within a few years.