M&A Alert—November 3, 2017
Snap acquires ad campaign measurement company Metamarkets for close to $100 million.
Author: John Ascher-Roberts
Transaction Size: $100mm
On November 3, 2017, Snap Inc. (NYSE: SNAP) announced its acquisition of ad campaign measurement and analytics startup Metamarkets for up to $100 million, according to Techcrunch.
Metamarkets provides a real-time ad campaign analytics platform that enables digital media buyers, sellers and exchanges to make better decisions in their advertising transactions. The platform is used by demand-side and ad exchange clients to give their customers greater visibility in their ad purchases by providing visualizations of their campaign’s performance, audience targeting data, ROI, and other key metrics in real-time for media buyers. The platform provides three main products: Explore, a visualization tool for filtering and comparing real-time campaign data, Connect, a data feed API to plug into customer apps or dashboards to feed other engines, and Druid, an open-source data platform that allows for data cleansing and querying. These also give sellers and exchanges insights into their inventory availability, and real-time bid activity to optimize their ad sales. Metamarkets’ ad exchange clients include Rubicon Project and Twitter’s MoPub, and demand-side clients include Magnetic and Beeswax. Metamarkets’ competitors include Domo, Tableau and Chartbeat.
Michael Driscoll, CEO, and David Soloff, board member, co-founded the San Francisco-based company in 2010. Metamarkets received $58 million from investors including Anthemis Group, AOL Ventures (Mike Brown), Bridge Bank, Data Collective (Zachary Bogue), FLOODGATE, Founder Collective, IA Ventures (Roger Ehrenberg), Khosla Ventures (Vinod Khosla), and Village Ventures (Matt Harris). They currently employ over 50 people.
Founded in 2011, Venice-based Snap Inc. develops the photo messaging app Snapchat, the wearable camera Spectacles, and the personalized stickers Bitmoji. Snapchat has expanded from private photo sharing to include ad-supported short-form content, geofilters that tag photos with location information, and Snap Ad Manager, a self-serve ad manager and bidding platform which was launched in June. Snapchat has 173 million daily active users and generated a net loss of $2.9 billion in the trailing twelve months ending June 30, 2017.
Snap has a market capitalization of $17.8 billion and LTM revenues of $625 million. Snap launched its IPO in March of this year.
Snap is acquiring Metmarkets for a price around or below $100 million, according to Techcrunch.
Transaction Value: $100mm
TV / Invested Capital: 1.7x
Comparable transactions include Oracle’s acquisition of Moat in April of 2017 for $850 million (12.6x invested capital, covered in our M&A alert), Time’s acquisition of Adelphic in January of 2017 (undisclosed), Salesforce’s acquisition of Krux Digital in October of 2016 for $700 million (14.0x invested capital, covered in our M&A alert), Neustar’s acquisition of MarketShare Partners in November of 2015 for $450 million (7.9x LTM revenue, covered in our M&A alert), AOL’s acquisition of Convertro in May of 2014 for $101 million (10.1x invested capital, covered in our M&A alert), Apigee’s acquisition of InsightsOne in December of 2013 (undisclosed), and Twitter’s acquisition of MoPub in September of 2013 for $350 million (3.5x LTM gross revenue, covered in our M&A alert).
Metamarkets will provide a valuable tool for advertisers and brands to measure and optimize their ads, and give Snap valuable marketplace insights on their Ad Manager. This acquisition also follows Snap’s recent unveiling of its cross-platform tracking platform, Pixel, which will tie in-app ads to site traffic increases. The two platforms allow Snap to more clearly demonstrate a return on ad investment to their advertising clients, increasing the value of Snap Ads and allowing to Snap encourage their media buyers to bid at higher prices. This can help Snap better compete for brands’ budgets vs. the bigger players in the space such as Facebook, Google, LinkedIn, Pinterest and Twitter.
Architect Partners’ Observations
This move comes at an opportune time for strengthening Snap’s ad revenue story, only a few days away from Snap’s Q3 2017 earnings call and after Snap’s stock price has dropped below its IPO price. Also, research firm eMarketer cut its forecast for Snap’s global advertising revenue by 14% to $774.1 million this year. This stands in contrast to the eMarketer’s position in March, in which it estimated that the social media platform’s global ad revenue would hit $900 million while its U.S. ad revenue would sink by 17% to $642.5 million.