Sizmek Posts Not-So-Sizable Q2, Buffs Up On Mobile With Aerify Media Acquisition

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sizmek 02Sizmek’s Q2 2014 revenues disappointed, with a meek 7% YoY increase to $44 million. In addition, the company said it had acquired Aerify Media for $6.25 million in cash (not reflected in Q2 revenue).

First, the revenues: Despite double-digit growth in LATAM and EMEA, Sizmek struggled due to what CEO Neil Nguyen singled out as “lower-than-expected performance in North America and Asia Pacific.”

APAC performance, down 12% YoY, was “the weakest geography by far this quarter.” This represents Sizmek's first loss in the region in 10 quarters, said Nguyen, who theorized that the slowdown occurred because of reduced advertising from airlines in light of the two Malaysia Airlines tragedies.

The problem in North America was due to stagnation in rich media on desktops, as most clients focused investments in video and mobile.

“We’re being conservative and expect little to modest recovery of those key areas as we look at the full year,” Nguyen said.

Sizmek updated its full-year expectations, anticipating a 12-17% revenue increase.

The goal is to return to double-digit growth. This will come from onboarding in the second half of the year $5 million of the “roughly $10 million of new business wins that happened in the second quarter,” Nguyen said. He also expects the cross-channel analytics attribution suite Sizmek announced in Q2 to bring additional customer wins during the back half of the year.

Now for the bright spots: Mobile revenues grew 58% and in-stream video revenue grew 101% YoY. The increase in video occurred largely because of investment in CPG and retail verticals, as well as uptake from the mid-market.

Revenues from Sizmek’s programmatic data solutions increased 54% from the same period last year. This growth came from key client wins including Yahoo and Amazon’s A9 subsidiary, which develops search and advertising technology.

Sizmek has four products relevant to programmatic.

The first is its Peer39 dataset, which Nguyen said was “the largest prebid data solution that offers advertisers the ability to, in real time, determine relevancy, quality and the contextual capabilities of a web page before they make a transaction.” He added that the Peer39 dataset is available in 42 different languages and is not based on cookies.

Nguyen declined to specify Peer39’s revenue, though he said it’s “approaching a double-digit million-dollar business in 2014.” He added that over the past two years, Sizmek has seen between 50-75% growth off of what used to be “a relatively small business.”

The second element of Sizmek’s programmatic offering is a managed-service solution, “a small team that helps small agencies execute programmatic buys” using Sizmek’s in-house workflow capabilities as well as various third-party demand-side platforms (DSPs).

The third element is a solution called DSP Connect, specifically designed to help advertisers deal with DSP fragmentation issues. DSP Connect is an execution layer that sits on top of and unites the various DSPs (mobile, display, native and video) often used by advertisers.

The forth and last element is Sizmek’s response to the shift away from rich media on desktop: a real-time bidding environment for rich media to deliver what Nguyen called “high-impact ads.”

Airing Out With Aerify

Sizmek also acquired Aerify Media, which it intends to integrate fully into its MDX campaign management platform. The MDX platform consolidates what used to be separate advertising technologies, including ad serving from MediaMind, programmatic data solutions from Peer39, rich media from Unicast and EyeWonder and social media activation through Republic Project.

Aerify, whose entire team will join Sizmek, produces technology designed to collect customer data from desktop sites, mobile sites and mobile apps with which marketers can build behavioral profiles to better target and attribute path-to-purchase actions. Its functions include in-app tracking and analytics, mobile retargeting, cross-device user identification and deep-linking technologies.

Sizmek anticipates Aerify’s tracking and attribution capabilities to be fully integrated into Sizmek’s product suite by Q4.

The focus is mobile commerce, a common buzzword a few years ago. But Andrew Bloom, SVP of corporate and business development at Sizmek, sees this changing.

“Now, the number of app marketers who are deploying apps and are genuinely driving mobile strategy is real and mobile commerce is much more than a buzzword,” he said. “Take a look at the number of ecommerce apps that are out there and the increasing time that people are spending on these apps.”

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