While ad tech companies have been accumulating VC funds and growing their stacks – and sales orgs – for a while, many took pains to rightsize over the past year or so.
For some, the intent was to recapitalize or to prep for a sale if an IPO was a no-go. For others, it was about improving efficiencies or simply appeasing investors.
Videology, which has raised close to $200 million in its 11-year lifespan, is the latest vendor to clean shop before courting prospective acquirers. Business Insider reported late Tuesday that the video ad platform had hired Luma Partners to pursue a possible sale, though the company declined to comment or confirm.
But before that, Videology laid off about 8% of its workforce as the company pared down sales and client services roles less focused on its growth pocket – linear and advanced TV. Though it has competed with other early video ad networks for digital video business, Videology more recently pivoted to pursue enterprise contracts with companies like Sky and AT&T.
“This is part of a continuation of trends we have been observing for some time,” said Brian Wieser, senior analyst at Pivotal Research Group. “Many of the companies in ad tech, which are mature now, were funded in part or in whole prior to 2010. And, as many VC funds have 10-year lives, investors need to get liquid in some form.”
Here are a few other ad tech companies who recently restructured in the hopes of achieving late-stage success.
Telaria/Tremor Video: Servicing both the buy and sell sides can create conflicts in a company’s business model, which motivated Tremor Video to divest its buy-side business to Taptica for $50 million in August and rebrand its public, sell-side business as Telaria.
“It was logical for us, being at the scale we were, to focus on one part of the business with the highest growth and margin profile and where we have considerably less overhead,” CEO Mark Zagorski said at the time of the divestiture.
AppNexus: AppNexus laid off 13% of its staff in October 2016 in an effort to unify disparate divisions like its Advertiser and Publisher Technology groups, and to push publisher-focused solutions like its open-source wrapper Prebid. AppNexus slowed investment in its buy-side technology and sales as competitors like The Trade Desk and MediaMath continued to win RFPs, AdExchanger sources claimed.
Rubicon Project: Last January, Rubicon cut ties with Chango, the search retargeter it had acquired for $122 million in 2015, after struggling to maintain its high-margin intent marketing business. (Rubicon had already laid off 19% of its workforce, or 125 employees, in November 2016.)
Simultaneously, rumors swirled that Rubicon was exploring exit options. Rubicon CEO Michael Barrett refuted those claims, as the company doubled down on mobile, guaranteed orders and supply path optimization with its acquisition of nToggle.
Adform: Danish ad server and DSP Adform parted ways with 8% of its workforce last January as the company embarked on a “rightsizing exercise” to reduce redundancies across 15 territories. Adform, however, was relatively bootstrapped compared to its more bloated ad tech peers, having raised less than $30 million.
Rocket Fuel: Rocket Fuel had one rocky ride on the road to acquisition by Sizmek last July. Six months prior, Rocket Fuel laid off 11% of its workforce to save $20 million in operating expenses. But that wasn’t Rocket Fuel’s first dalliance with a downsizing; it cut 11% of its workforce in 2015 in a push for more efficiencies as competition from DSP-DMP hybrids – and acquisitive marketing clouds – heated up.
MediaMath: In April 2016, the company cut headcount in the “low-to-mid single digits” in a push to productize enterprise-grade software – and erect an enterprise sales organization. But unlike other companies, which have jettisoned significant lines of business, MediaMath hopes to become a full stack that offers everything a digital advertiser needs.
This strategy makes MediaMath more expensive than other ad tech platforms – as does the fact that it has accrued $382.5 million over seven rounds of funding, according to CrunchBase.
“The very big [ad tech players] like MediaMath would be too big for all but the largest media companies to consider,” said Tolman Geffs, co-president at investment banking firm Jordan, Edmiston Group, commenting on the fate of scaled DMP-DSP hybrids in the year ahead.
“A lot of media companies would still consider bringing DMP and DSP-like capabilities under their hood because they have such large audiences and data lakes that they can put to work and do much more effectively with owned than with rented equipment, but they’re not going to spend $1 billion on them.”