Mobile ad platform AppLovin loves acquiring companies.
On Wednesday, AppLovin entered into a definitive agreement to buy MoPub from Twitter for $1.05 billion in cash.
The move makes a lot of sense.
Recently-public company AppLovin has been on a mobile ad tech buying spree, with more than a half-dozen acquisitions under its belt in the past few years. The MoPub business, which until now served as a third-party ad exchange for mobile publishers nested within Twitter, never fit neatly into Twitter’s overall business.
“There have been whispers of Twitter’s interest in unloading MoPub for a while now. The only questions were to whom and for how much,” said Matt Barash, senior VP of business development at Zeotap and a former AdColony exec. “The walls around the major mobile players are only getting taller.”
Mo Privacy Probs?
Twitter may have been spurred into securing a buyer more quickly, however, due to the current privacy environment.
MoPub didn’t generate enough revenue – just $188 million last year – to be worth the potential privacy headache.
Beeswax founder and current FreeWheel exec Ari Paparo’s hot take (shared on Twitter, of course) is that Twitter “wants to get on the right side of privacy issues.”
Last January, the Norwegian Consumer Council, an Oslo-based nonprofit, found that dating apps, such as OkCupid and Grindr, and several of their ad tech partners, including MoPub, violated the General Data Protection Regulation (GDPR) by neglecting to give users the option to make an informed choice about how their data would be used.
In reaction to the report, the Electronic Frontier Foundation referred to MoPub as a poster child for “the vast, convoluted, opaque ecosystem of personal data collection and sharing that powers modern ad tech.”
Add Apple’s iOS 14 consent requirements to the mix, and the powers that be at Twitter likely felt the time was more than ripe to exit third-party ad tech.
The rationale
According to Twitter’s CFO Ned Segal, the sale of MoPub will allow the company to concentrate more of its efforts “on the massive potential for ads on our website and in our apps.”
Ads on Twitter fall under Bruce Falck’s department. As Twitter’s revenue product lead, he’s in charge of Twitter’s ad server rebuild, known as Project Tao.
In Falck’s view, “the sale of MoPub is all about increased focus, redirecting our resources and delivering faster growth in a number of areas, including performance-based ads, SMB and commerce.”
In other words, Twitter is still hoping to attract more performance ad dollars, but seems to have lost its appetite for the third-party ad business.
“It’s just the latest example in a wave of ad tech consolidations kicked off by Apple’s AppTrackingTransparency changes a year and a half ago,” said Alex Bauer, head of product marketing and market strategy at Branch.
Although Twitter bought mobile demand-side platform CrossInstall in May to boost MoPub’s value to mobile app developers, perhaps trying to keep up with Facebook and Google – especially after Apple’s iOS 14 changes – proved a battle for ad bucks Twitter no longer wished to wage.
And Twitter’s not alone.
“Facebook dialed down its Audience Network after iOS 14 was announced,” Barash said. “The legacy value of a platform having a third-party business just isn’t there anymore.”
So, what does AppLovin get?
According to a statement from AppLovin, buying MoPub is “a highly strategic investment” in a fast-growing market.
The plan is to combine MoPub with AppLovin’s software platform so that publishers will be able to maximize their revenue growth through higher demand and increased competition for ad impressions, while advertisers will have access to more inventory and, ostensibly, better opportunities for return on ad spend.
Through the combination, AppLovin is also hoping to accelerate the shift to in-app bidding.
Key features from MoPub will be merged into MAX, the in-app header bidding startup AppLovin bought in 2018.
At the same time, MoPub’s DSP demand – MoPub has partnerships with more than 130 demand-side platforms – will be integrated directly into AppLovin’s software.
MoPub’s employees will join AppLovin, and current MoPub customers will be moved onto AppLovin’s platform once MoPub’s features have been added into AppLovin’s offering.
Since the 2018 acquisition of MAX, AppLovin has also bought software development kit management platform SafeDK, shelled out $1 billion to acquire mobile attribution and measurement provider Adjust and acquired multiple gaming studios, including PeopleFun and Belka Games – not to mention the purchase of mobile game juggernaut Machine Zone last year.
Wonder what’s next.
