PE Backers And Sizmek Vets Take Over Peer39, Sizmek’s Contextual Data Biz

The Sizmek bankruptcy auction officially closed on Thursday with the announcement that Peer39, the company’s contextual targeting unit, was sold to the private equity firm O3 Industries for $18 million.

The Trade Desk and Zefr, a contextual targeting company primarily for YouTube, also submitted bids for the final Peer39 auction last week, according to sources with knowledge of the deal.

Business Insider first reported the news.

O3 doesn’t specialize in media and advertising companies, but its bid was fronted by ad tech vets Mario Diez and Alex White, who will be CEO and COO, respectively, of the new standalone company. White was Sizmek’s former VP of product strategy, and Diez was CEO of Pointroll, the dynamic content optimization startup, when it was sold to Sizmek in 2016.

Restarting as an independent company will help Peer39, because it can focus on one road map moving forward, Diez said.

The plan for the next few months is to gather feedback from DSP partners, he said. From there the company will pinpoint growth opportunities for contextual data and features like pre-bid targeting and brand safety.

The contextual data market is growing thanks to changes in “privacy-friendly targeting environments,” Diez said.

Contextual data companies like Peer39 don’t rely on cookies, because they target content on the page, not individual users. Privacy regulations and browser policy changes by Chrome and Safari diminish the value of cookies, Diez said, and contextual targeting will come into higher demand as cookie-based tactics like behavioral targeting and user retargeting lose their edge.

Peer39 has its work cut out educating more brands and agencies to reach the company’s potential, Diez said.

One downside to being cookie-free ad tech is that contextual tech doesn’t fit well with performance marketing campaigns.

There also aren’t many independent contextual data suppliers in the market. The Trade Desk’s data partner marketplace has only two contextual data companies, Peer39 and Oracle Data Cloud’s Grapeshot.

That also partly explains The Trade Desk’s bid for Peer39. The DSP’s only previous acquisition was of the cross-device startup Adbrain in 2017.

In research prior to the acquisition, Diez said publishers and exchanges mentioned steep drop-offs in bids and CPMs on Safari since the Apple browser launched Intelligent Tracking Prevention, its new anti-tracking technology.

“That’s an opportunity for us to grow,” he said. “The value of that impression doesn’t change, but the targeting elements that were driving intelligence for advertisers and yield for publishers has disappeared.”

New privacy laws are also a nice tailwind for contextual targeting, if not much else in ad tech. Oracle Data Cloud’s acquisition of UK-based Grapeshot, which sold for more than $300 million, helped it diversify away from cookie-based data sales.

Contextual targeting is already a larger part of DSP data sales and the ad tech conversation in European after GDPR, Diez said. The California Consumer Privacy Act, which comes into effect next year, could spur a similar shift in the U.S., he said.

Identity-based targeting and audience data has driven ad budgets for the past decade or so, Diez said. But those tactics aren’t well suited for new privacy-based environments.

“I think we’re going back to our roots,” he said.

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