Tremor International has entered into a definitive agreement to acquire ad tech firm Amobee from Singapore-headquartered telco Singtel for $239 million.
The deal price is $82 million less than Singtel paid for Amobee in 2012, despite the ad tech business being bolstered with a string of acquisitions, including Videology and Turn.
Singtel has been seeking to sell Amobee for some time — it told investors it would place the firm under strategic review in May 2021 after its revenue fell 18% in fiscal 2021, a decline it attributed to Covid-related cuts in ad spend and lower TV revenue.
Amobee’s revenue has been broadly flat over the past two years: it generated US$663.5 million in fiscal 2022 (to March 31), compared to $652 million the year prior, according to Singtel’s annual report. It lost $50.4 million in earnings in the financial year 2022.
Tremor International chief financial officer Sagi Niri said in a conference call on Tuesday (July 26) that Amobee is “not enjoying the level of profitability that Tremor International has,” adding that it “will take a long time” to get all of its businesses into the green.
TV and performance
So why did Tremor purchase a loss-making business?
Amobee’s client base, data and technology were noted as growth levers by Tremor CEO Ofer Druker.
Amobee will bring new capabilities in linear TV and performance video while enhancing Tremor’s “core growth drivers” such as CTV, Druker noted. The acquisition includes Amobee’s advanced TV platform and its demand-side platform (DSP) but not its email marketing platform.
Amobee’s DSP includes self-serve capabilities which link linear TV and connected TV planning and buying in one platform. The majority of its DSP revenue is self-service, Druker said.
“This is a critically important capability which allows advertisers to understand and analyse true de-duplicated reach when executing campaigns simultaneously across linear and digital and will enhance Tremor’s data footprint,” Druker said.
Tremor also operates a self-service DSP on top of its managed service offering. It said it intends to integrate capabilities of both platforms into one DSP, a process that it expects will take “up to a year,” Druker said.
Amobee also plugs a gap with Tremor’s capabilities in performance marketing. Where Tremor’s main business is in delivering brand-building campaigns, Druker said it is witnessing increased demand from direct-to-consumers advertisers to add performance capabilities into video campaigns.
Meanwhile, Amobee’s client base, which includes more than 500 customers globally, will expand Tremor’s reach and drive additional advertiser demand through its supply-side platform Unruly, Druker said.
While both businesses derive the majority of their revenue from the U.S., Amobee can “meaningfully reinforce” Tremor’s business in markets such as Australia, the UK and Europe, Druker said.
Amobee will also strengthen Tremor’s insights capabilities. Combined with its partnership with smart TV platform Vidaa, in which Tremor has exclusive access to its automatic content recognition (ACR) data, these insights open up a new source of revenue for Tremor across measurement and ad tracking, Druker said.
“We believe Amobee’s data capabilities will further enhance Tremor’s contextual capabilities helping the company prepare for a cookieless world,” he said.
Druker further noted the benefit of adding data and technology experts from Amobee’s around 800-strong employee base.
Tremor anticipates it will take around 12 to 18 months to fully integrate Amobee into its business, although it believes it will achieve “material synergies” on data and infrastructure “very early” after the deal closes, Niri said. The transaction is expected to close during Q3 2022.
Amobee is Tremor’s fourth and largest acquisition in the last five years. Tremor is seeking to grow by acquisition on the demand-side, and organically in the rest of its business.