Mediaocean Acquires 4C, Bridging Broadcast And Digital Walled Gardens

Mediaocean, the de facto software for most US TV advertising, has agreed to acquire the ad tech and analytics startup 4C on Monday for $150 million.

4C raised $31 million in two rounds, most recently in 2016 at a valuation of between $50 million and $100 million.

Mediaocean CEO Bill Wise told AdExchanger the two companies pair well since they share key customers at major agencies and both operate as pure software companies, meaning they process ad spend but make their money on tech licensing fees, not campaign CPMs like a DSP does.

The two companies are also flip sides of the coin that is advanced TV advertising. Mediaocean processes more than $70 billion per year in television advertising, while 4C is known as a walled garden operator, with integrations with Facebook, LinkedIn, Twitter, Amazon and others.

Unlike typical programmatic buying platforms, 4C doesn’t touch the open web, sticking instead to the major platforms, said CEO Lance Neuhauser, who will be president of Mediaocean when the deal closes. Now that TV and telco industry giants have emerged as advertising walled gardens in their own right (consider Comcast’s NBCUniversal and ad tech businesses like FreeWheel, or AT&T’s consolidation of WarnerMedia and Xandr), 4C needs similar inroads with those platforms.

“The TV world is the most successful and oldest walled garden, really,” he said.

4C began its TV advertising push in 2017 with Mediaocean as its first partner: A year later it struck similar partnerships with FreeWheel and Telaria (now called Magnite). But Neuhauser said that as a programmatic startup, 4C didn’t have the same influence with TV companies or capacity to get advertisers to change practices.

“We were in a position where we could take additional funding and fight the good fight, as a challenger brand in the category,” he said. “But this was an opportunity to put our people on a bigger stage and impact philosophically what we believe in the industry.”

Mediaocean wasn’t actively shopping for programmatic tech, but impetus for the deal “bubbled up” from partnerships and product teams who already worked with 4C, Wise said.

And taking over 4C is an expedient because investing in digital video is a “double-edged sword” for Mediaocean, Wise said. Pure programmatic DSPs get excited about the potential growth of a couple hundred million in CTV budgets, but Mediaocean has tens of billions of linear TV business to protect, he said.

With 4C as a subsidiary, Mediaocean can balance those two revenue lines regardless of whether the advertiser has siloed or converged teams for buying TV and video ads.

Wise said Mediaocean’s core TV business provides a competitive edge against programmatic players. Most DSPs take a 10% margin, while the category leader, The Trade Desk, is more like 20%, he noted. Meanwhile, in the TV industry software intermediaries get “pennies on the dollar, not dimes,” he said. And that case should give Mediaocean and 4C a strong pitch for converged TV and video advertising campaigns.

4C’s digital growth opportunity is also critical for Mediaocean’s future prospects. 4C only processes $2 billion per year in ad spend – only about 1.5% of the $150 billion Mediaocean supports globally across all media channels – but today’s deal puts 4C at about 8% of the company’s total value, considering Mediaocean’s equity value is set at $2 billion after the deal.

“TV has always been our bread and butter,” Wise said.

And that isn’t going to change. But TV advertising itself is (finally) changing.

“The market is ready to transform in ways that didn’t seem remotely possible even six months ago,” he said.

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