M&A Alert—February 11, 2016
Time acquires certain assets of the media and ad technology company, Viant, for an undisclosed sum.
Author: Eric Risley & John Ascher-Roberts
Transaction Size: Undisclosed
On February 11, 2016, Time Inc (NYSE: TIME) announced an agreement to acquire certain assets of the media and ad technology company, Viant, for an undisclosed sum.
Viant is comprised of three advertising technology business units: 1) Specific Media, 2) Vindico and 3) Xumo and the former high-flying social network, Myspace.
These businesses have effectively been rebranded as Viant and are positioned as the “Viant Advertising Cloud” with three components: Identity Management Platform, Media Execution Platform, and Data Analysis Platform.
The Viant Identity Management Platform helps brand advertisers target specific consumers, the Media Execution Platform delivers display and video ads to these consumers on computers, tablets and mobile devices and the Data Analysis Platform evaluates how effectively the ads were in driving purchases, both on-line and off-line. Most importantly, Viant claims improved targeting capabilities due to their ownership of consumer identities and interests via the claimed 1.2 billion registered Myspace users, representing 102mm U.S. households and collecting 10 billion behavioral data points per month.
Tim Vanderhook, CEO, and Chris Vanderhook, COO, founded the Irvine-based company in 1999. Prior to its acquisition, they raised $130.9 million in funding from investors including 137 ventures, Enterprise Partners, Francisco Partners (Neil Garfinkel), Kennet Partners (Michael Elias) and Shepherd Ventures (Tom Siegel). We believe Viant had roughly 650 employees upon its acquisition.
Time Inc. publishes print and online magazines in the United States, the United Kingdom, and internationally. Titles include, among others, People, Sports Illustrated, InStyle, Time, Real Simple, Southern Living, Entertainment Weekly, Travel + Leisure, Cooking Light, Fortune, and Food & Wine in the United States, as well as approximately 50 diverse titles in the United Kingdom. Time reaches over 120mm monthly readers via its print magazines and its digital properties include more than 60 websites that attract 150 million monthly visitors. Based in New York, revenue for the last twelve months ending December 31, 2015 was $3.1 billion. Time has a market capitalization of $1.3 billion.
Time is purchasing Viant for an undisclosed sum.
Comparable transactions include Telenor’s acquisition of Tapad in February of 2016 for $360 million (6.3x rev), Neustar’s acquisition of MarketShare Partners in November of 2015 for $450 million (7.9x rev), Verizon’s acquisition of AOL in May of 2015 for $4.4 billion (1.7x rev) and Twitter’s acquisition of TellApart in April of 2015 for $533 million (5.3x rev).
Time owns some of the premier global magazine brands but is grappling with the challenging transition from print to digital distribution. One of the fundamental differences between physical and digital distribution is the ability to target the right ad, to the right person, on the right device, at the right time. However, to do so requires the ability to instantly recognize the reader or characteristics about the reader, select an ad, deliver the ad and assess effectiveness of the ad. While the opportunity is well-recognized, doing it effectively remains challenging. Most of these requirements are fundamentally different in a digital environment and these capabilities are Viant’s strength.
Time is particularly attracted to the understanding of consumer preferences and interests that the registered users of Myspace “willingly” share as they engage within Myspace or can be collected by Myspace and Viant’s ad technology business units in other ways. This proprietary data, known as “first party data”, is particularly valuable as it allows ad targeting to the individual based on behavior and expressed interests vs. ad targeting using demographics or inferences about the consumer. Not only is Time acquiring this valuable first party data from Viant but they also own their own first party data via the information they collect from their current print and digital magazine subscribers. Viant brings critical data analytics capabilities to better utilize the insights contained within Time’s subscriber data.
Viant’s ad technology also offers the ability to deliver the right ad to the person or group of people that the first party data identifies, and to then analyze the results. While these capabilities are arguably already widely available and are being commoditized, some major digital publishers own and control their own ad delivery and analytics platforms.
Time expects that Viant will add approximately $100 million in revenue in 2016, roughly 25% of their current annual digital advertising revenue.
Architect Partners’ Observations
We believe this is a very strategic transaction, not only for Time but also having ramifications to many other digital publishers. Fundamentally, being able to harvest and utilize consumer preference data effectively is rapidly becoming table stakes for any publisher relying on ad revenue, however many don’t currently possess the people or technology to do so today. We expect more data and ad technology-driven M&A transactions as a result.