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Irvine-based Adaptive Media, a supply-side programmatic advertising company, just completed its acquisition of Ember. Ember, which sprouted from Santa Monica-based accelerator Start Engine just about a year ago, has a real-time bidding platform.
“The deal is a very strategic acquisition for Adaptive Media as Ember's technology now powers the company's programmatic capabilities,” said Ben Padnos, head of corporate development at Adaptive Media.
Ember’s demand-side platform (DSP) uses machine learning algorithms and contextual and semantic engines to help ad buyers efficiently place digital advertisements. Adaptive Media, a supply-side platform, helps mobile app developers, publishers and video content developers monetize their ad inventory through a proprietary ad-delivery and optimization platform.
The merger of the two companies “truly positions Adaptive Media as one of the only companies with an end-to-end monetization platform driven by programmatic algorithms” said Padnos. “Real-time bidding is an extremely hot segment of digital advertising, and we think this deal gives us one of the leading platforms in the space.”
Ember’s real-time bidding platform will hopefully also help Adaptive Media monetize more of its content partners’ ad space. While TV ads are a well-known value, programmatic ads often are not well understood by traditional media buyers. Having Ember’s real-time bidding platform could change that.
“Advertisers know where their ads are going on TV, but the lack of transparency with online video makes many brands reluctant. That’s why we started Ember,” said Ember cofounder and CEO Nic Borensztein in a statement. “Our platform puts advertisers in control of where their dollars are spent and optimizes campaigns in real-time to maximize ROI.”
Adaptive Media acquired Ember for “$560,000 in stock, plus cash bonus incentives based on revenue flowing through the platform,” said Padnos. Despite a possible payout from stock sales, the deal’s terms appear to emphasize a commitment by Ember’s employees to Adaptive Media’s future.
Adaptive Media CEO Qayed Shareef seemed to confirm this in a press release when he said, “What separates advertising-technology companies is their technology platform and team. In acquiring Ember, we're getting both a fully-developed RTB platform as well as two brilliant engineers.”
As part of the deal, Borensztein is now Adaptive Media’s Vice President of Engineering and cofounder Damian Ancukiewicz is now Chief Architect. Startup Engine founders Howard Marks and Pau Kessler will join Adaptive Media’s advisory board.
This talent will prove to be important for wrangling what is still a very new and wild market. Competitor Rocket Fuel recently had an IPO and is now valued at a $2 billion market cap. Since it’s IPO, Rocket Fuel’s stock value has fluctuated wildly, perhaps underlying a market that does not quite understand programmatic ads. (Even advertising industry publication Ad Week has varying definitions.)
Though it may take awhile for ad buyers, content providers and the stock market to warm up to this new way of advertising, in time it could be lucrative. Marketing research firm eMarketer expects worldwide digital advertising to exceed $118 billion this year, and to grow to $163 billion by 2016.
To secure part of that bright future, Adaptive Media believes it is making all the right moves: "We believe that owning an RTB platform (Ember) that works across video, mobile and display is a recipe for exponential growth in 2014 and beyond," Shareef said.
