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Cadent to acquire AdTheorent for $324 million
Source: Campaign US
April 1st, 2024
Summary: Cadent, an addressable TV advertising company, will buy all outstanding shares of AdTheorent, a digital advertising demand-side platform (DSP), for $3.21 per share. Acquiring a DSP will move Cadent closer to its goal of building an end-to-end omnichannel advertising tech stack. AdTheorent will increase Cadent's customer base to nearly 1,000 advertisers, giving Cadent access to demand from smaller, regional advertisers.
The AdTheorent deal follows Cadent's own acquisition by Novacap, a Canadian private equity firm that paid $600M for the company in August 2023. At the time, Cadent said it would use Novacap's cash infusion for acquisitions. In May 2023, Cadent bought EMX, a supply-side platform (SSP), through a bankruptcy auction. Now this.
AdTheorent's $324M price tag is a steal considering that it posted $171M in 2023 revenue, $81.7M in 2023 profit, and was valued at $1B in 2021.
Cadent launched in 2007 as Cross MediaWorks, a cable TV ad seller that eventually expanded to broadcast, streaming TV, and programmatic inventory. Agencies and advertisers use its consolidated platform to target ads across 1,100 broadcast stations, 90 cable networks, and 200 multichannel video programming distributors (MVPDs), according to the company.
Deal Grades
Cadent: B+
AdTheorent: B
Opinion: M&A is back baby! Cadent got a great deal on paper, given AdTheorent’s strong financials (note: their growth rate is underwhelming at only 3% in 2023). AdTheorent gives Cadent much more scale in an adjacent sector (programmatic display) and access to a new customer base (small to mid-size performance-focused advertisers). That’s a 2+2=5 opportunity for Cadent.
Big picture, traditional ad tech continues to mature and consolidate. SSPs and DSPs continue to get swallowed up by bigger players or shuttered entirely, as publishers and advertisers get tighter about how many tech partners they use to essentially perform the same functions. As the financial markets continue to demonstrate stability, and the digital advertising arrow continues to point up (more on this below), we expect this trend to persist.
While many digital platforms offer a consolidated buying approach across digital channels, Cadent is now uniquely positioned to offer consolidated buying across traditional TV and digital. Some platforms claim they can do this, but Cadent’s access to premium linear TV inventory is meaningfully differentiated versus digital-first platforms that are buying up linear TV scraps in order to check the linear TV box.
Interesting to see a company come at the omnichannel problem from linear TV DNA. Keep an eye on Cadent...
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The CMA Is Prepared to Delay Google's Cookie Deprecation Plans 🔒
Source: Adweek
March 28th, 2024
Summary: Unless Google can address concerns from the UK Competition and Markets Authority (CMA), the antitrust watchdog may push back Google's cookie deprecation timeline, which is currently set for Q3. Specifically, the CMA is worried that Google will leverage Chrome data to recreate cookie-tracking that no one else will be able replicate; Google's Privacy Sandbox will give Google’s advertising tech an advantage over competitors; and Google won't give consumers enough control over their privacy preferences. The formal haggling process will likely start at the beginning of Q3 when Google triggers a 60-day standstill period during which it will not be allowed make any cookie-related changes in Chrome. The CMA will try to resolve its objections with Google during the standstill, which will expand to 120 days if Google and the CMA can't agree. The CMA has the authority to modify the deprecation timeline as needed to ensure that Google won’t get a leg up. The CMA is asking ad tech companies and publishers to share results from Privacy Sandbox tests by June.
“If we’re not satisfied we can resolve the concerns, [we can make changes] to effectively delay the implementation,” said Craig Jenkins, director of digital markets at the CMA at an IAB Tech Lab event last week. “We do have powers to ensure Google addresses these concerns.”
Opinion: The CMA coming out and saying they will push out cookie deprecation to this specific audience means they are fully prepared to follow through. Frankly, it sounds a little like they're itching to wield their power. Even if just to set a precedent. Another delay would mean more analysis paralysis for an industry desperately needing to move on from its unhealthy addiction to third-party cookies.
A few months ago, we thought there was a 90% chance of third-party cookies being deprecated in Chrome by the end of 2024. We’re now down to 40%...
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Other Notable Headlines
How RMNs Use MFA And Cheap Inventory To Game Attribution Rules - Many retail media networks (RMNs) tout closed-loop purchase attribution as their secret sauce. But per a recent Adalytics report, RMNs will tag users on low-quality made-for-advertising (MFA) sites and claim credit for any sales. Everyone generally agrees that MFA ad placements don't provide any value since consumers don’t really pay attention to ads on these cluttered websites. RMNs of all sizes, from Amazon and Google to regional players, serve ads on MFA sites while offering advertisers little transparency into where ads appear. The rub for advertisers is that RMN ads are usually more expensive than open programmatic ads, and appearing on MFA sites carries brand-safety risks. MFAs are likely not going anywhere as long as RMNs have lots of demand and data and advertisers keep attributing value to ads in dumb ways.
How Home Depot is renovating its retail media network to reach more advertisers - Speaking of RMNs, Home Depot has rebranded its own ad network to “Orange Apron Media” and hosted an "InFronts" event—inspired by the TV upfront—to tout its ad products, measurement capabilities, and customer insights. Orange Apron Media aims to focus less on ad formats and more on the tools and partners that make ad buying easier for suppliers. It offers self-service or managed services to brands interested in its on-site, off-site, and in-store ad opportunities. Home Depot also has a partnership with Univision that can help its advertisers reach culturally diverse millennial, Gen Z, and Spanish-language consumers. Home Depot is testing campaigns with non-endemic brands in financial services, insurance, automotive, and telecom who are interested in reaching its audience of homeowners, small business owners, and professional contractors. So far, those tests are delivering "very positive signs."
Snowflake is doubling down on data clean room tech as it forges deeper ties with the ad industry 🔒 - Snowflake has now fully integrated Samooha, the data clean room startup it acquired three months ago, into Snowflake Data Clean Rooms. Snowflake will use Samooha to "turbocharge" its existing data clean room and offer it for free to its customers. The tech will also be free to use when Snowflake customers use the clean room to collaborate with partners who aren't Snowflake customers, which could unlock new business opportunities for Snowflake. The data-cloud company wants to push clean rooms beyond marketing use cases into verticals such as life sciences, health care, and financial services. Clean rooms are hot, with plenty of competition from giants like Amazon and Google to specialists such as LiveRamp and InfoSum. In a 2023 survey of 500 executives, 87% said they planned to increase their use of data clean rooms in the coming year.
U.S. Ad Forecast for 2024 Raised on Improved Economic Outlook, Digital Media Momentum - Things are looking up for the US advertising industry. Magna raised its 2024 forecast to 9.2% growth, up from 8.4% predicted in December. Magna cites an improving macroeconomic environment, the impact of cyclical events such as the Paris Olympics and political advertising, and momentum in digital media formats such as streaming, retail media, and social. Streaming, in particular, will see a 12.9% increase in ad revenue this year, driven by the introduction of advertising on Amazon Prime Video. Magna predicts political advertising will produce $9B in incremental ad revenue for media owners.
Gen-AI Search Engine Perplexity Has a Plan to Sell Ads🔒- The year-old search engine will begin selling native ads in the "related questions'' section that appears in response to user queries. Perplexity will soon let brands sponsor and influence some of those questions." Perplexity says its mobile and desktop app users grew 8.6% in February to 50M. The search engine, which charges a $20 monthly subscription fee, is powered by a proprietary AI model and OpenAI’s GPT. Founded by Meta and OpenAI AI researchers, Perplexity raised $74M in Series B funding from NVIDIA, Jeff Bezos, and other investors, which valued the company at $520M; just two months later, it was close to finalizing another funding round that doubled its valuation to about $1B.
Brands jockeying to show up in AI results (on a paid basis but also organically) is the next major advertising frontier, folks.
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Other Notable Headlines (That You Should Know About Too)
Amazon spends $2.75 billion on AI startup Anthropic in its largest venture investment yet - Amazon has already invested $1.25B in Anthropic, a generative AI competitor to OpenAI and ChatGPT.
Criteo Secures Its First MRC Accreditation - The Media Ratings Council has given its blessing for Criteo's impression and clicks metrics on desktop, mobile web, and in-app channels.
Google to destroy billions of data records to settle "incognito" lawsuit - The lawsuit alleged that Google tracked users when they were browsing in "incognito" mode.
Reddit shares plunge almost 25% in two days, finish the week below first day close - Reddit, which IPO’d on March 21st, has seen its share price decline over 20% from peak value.
LinkedIn is testing a TikTok-like short-form video feed to boost user engagement - A new "Video" tab within the LinkedIn app leads to a scrollable video feed aimed at increasing discovery and engagement.
California Issues Enforcement Advisory On Ad Targeting Opt-Outs - Many companies are asking for too much personal data when users opt-out from targeted advertising, the California Privacy Protection Agency has warned.
AI advertising startup valued at $4B after fundraising - With $115M in new funding, The Brandtech Group (formerly known as You & Mr. Jones) will make acquisitions and increase scale for its generative AI platform, which helps brands pump out more effective marketing using AI technology. $4B startup? 🤔
Walmart Connect opens up to small and non-endemic advertisers - Walmart is allowing small marketers, international suppliers, automotive marketers, financial marketers, and others that don't directly sell products through Walmart to advertise via Walmart’s ad platform.
Nebraska Looks to Tax Advertising to Pay for Property Tax Cuts 🔒- Nebraska may join New Mexico and Maryland in taxing digital ads.
Discord to Start Showing Ads for Gamers to Boost Revenue 🔒 - Discord, which offers a free chat platform for gamers, has long avoided advertising on the grounds that they threaten the user experience and privacy. And apparently Tesla spends more on advertising than ever before. Despite what Elon Musk says about advertising. Because advertising is inevitable.
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That's it for this week's newsletter. Drop us a line with any questions / feedback.
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