M&A Alert—January 25, 2011
Adobe Acquires DemDex
Transaction Size: $58mm
On January 18th 2011, Adobe announced its agreement to acquire Demdex for approximately $58mm
DemDex offers SaaS-based software that captures, manages and analyzes behavioral data derived by tracking consumer interactions with publishers’ websites and online advertising campaigns. The benefit to publishers is that it enables improved segmentation of audiences and ultimately improved ad targeting. Customers include media companies, large publishers, e-commerce companies and advertising agencies. In recognition of the current concerns around individual privacy, DemDex also offers publishers a privacy management platform which allows consumers the opportunity to opt out. Founded in 2008, New York-based Demdex has 14 employees. DemDex has raised approximately $7mm in total funding from Shasta Ventures (Jason Pressman), First Round Capital and Genacast Ventures (Comcast’s seed venture arm). Upon acquisition, DemDex’s offerings will be integrated to Adobe’s Online Marketing Suite (powered by Omniture).
Mainly known for its digital authoring applications such as Flash, Photoshop, Illustrator and Dreamweaver, Adobe (NASDAQ:ADBE, Market Cap: $15b) has recently begun to integrate advertising monetization capabilities and features into its suite of offerings. Adobe offers solutions that enable advertisers, website creators and application developers to incorporate robust tracking and analytics capabilities during the content authoring and application development process. Given the explosive growth in online marketing (which IDC projects to increase to a $109b market in 2013), this is a critical capability as revenue models shift from subscription to advertising monetization. In September 2009, Adobe acquired Omniture, an online advertising analytics platform for $1.8b. By July of last year Omniture accounted for 10% of Adobe’s revenues. The key executive sponsor of the DemDex acquisition was Brad Rencher, GM of Adobe’s Omniture business unit.
DemDex is private and does not disclose revenues. Although Adobe has not announced transaction value, it has been rumored to be $58mm.
High quality, data-derived audience segmentation is quickly becoming a must-have for publishers. Fundamentally, advertisers are increasingly interested in buying exposure to specific data-defined audiences regardless whether such audiences exist on well-known, branded online and mobile websites or not. Generic “impressions” without consumer targeting are increasingly considered low value. DemDex complements Adobe’s Omniture and creative authoring tools with an emphasis on publishers’ needs.
Architect Partners’ Observations
Competitors to DemDex include Krux Digital, Bluekai (who just bought TrackSimple, an online ad data analytics and optimization company), Quantcast, BrightTag and eXelate.