On 13th August 2013 independent mobile advertising network, Millennial Media, announced its acquisition of rival independent mobile advertising player, JumpTap, for about $225 m in stock. The consolidation of two of the largest independent mobile advertising players in the US is a signal that the mobile advertising market continues to develop and mature. Through the acquisition Millennial Media will broaden its opportunities and channels for revenue growth.
1. JumpTap’s focus on performance and real time bidding (RTB) advertising compliments and adds to Millennial Media’s capabilities respectively. Real time bidding is growing area of digital advertising and Millennial Media can now claim presence here.
2. Millennial Media can integrate third-party targeting data sources which JumpTap has leveraged to improve the ad-targeting and compliment Millennial Media’s own first party audience targeting information.
3. JumpTap’s network enables advertisers to purchase ad inventory across mobile, tablet and PC screens. Millennial Media is better positioned to meet the needs of advertisers aiming to target consumers across multiple screens.
However, shares of Millennial Media dropped 19% in value to $6.90 per share at the end of the day, as Millennial missed its revenue growth target by a few percentage points.
The acquisition allows Millennial Media to gain some ground on mobile ad leader Google. JumpTap processes over 2 B ads per day and it adds $53 m in annual mobile ad revenue to Millennial Media’s $177.7 m. So, will Millennial's acquisition of JumpTap worry mobile ad display leader Google? I think that’s unlikely. Google’s strong position in online display advertising, its competitive mobile display ad pricing, and its resources are likely to keep it ahead of the boosted Millennial Media. Instead, Google, and investors in Millennial Media, should be more concerned about the rapid inroads Facebook has made in mobile advertising. In 2Q 2013 Facebook reported 41% of its ad revenue came from mobile advertising, equating to $656 m, up from $375 m in 1Q 2013. The high adoption and usage of Facebook on mobile, combined with its wealth of user information and mobile ad units that are appealing to advertisers, is clearly turning Facebook in a leading contender for the $6 B mobile advertsing prize.