Q1: Sizmek Snags Mobile DSP StrikeAd For $11.7 Million; Mobile Revenue Up, Overall Revenue Down

SizmekStrikeAdAcquisitions and earnings – Sizmek likes to multitask.

On Thursday, the company announced its Q1 2015 results and its intention to buy mobile DSP StrikeAd for $11.7 million.

Excluding StrikeAd, revenue from mobile formats, in other words HTML5-related revenue, was up 103% YoY in Q1 2015, while in-stream video revenue increased 10% in the same timeframe. What Sizmek referred to as its data-driven products – programmatic decisioning, viewability and verification – trended up 32% from last quarter. Rich media was a black mark, however, with revenue down 33% quarter over quarter as anticipated. The format still accounts for 21% of Sizmek’s overall revenue.

Despite all that, overall revenue for Q1 was down from Q1 2014, decreasing 4% to $36.8 million, which Sizmek CEO Neil Nguyen blamed on FX headwinds and a significant budget cut at one of the company’s CPG clients.

Mobile is clearly Sizmek’s shining star and the StrikeAd buy is part of a narrative Sizmek has been weaving for the last several quarters around its capabilities in that area. In August, Sizmek announced during its Q2 2014 earnings call that it had paid $6.25 million to snap up mobile tracking and retargeting player Aerify Media. In April, Sizmek launched its HTML5 rich media ad builder.

But there was something missing from Sizmek’s stack, said Mike Caprio, the company’s GM of global product sales – namely, a buying platform. Although Sizmek maintains partnerships with a variety of different DSPs, including AppNexus, MediaMath, The Trade Desk, TubeMogul and Turn, it didn’t have a programmatic exchange of its own.

“This will fill the void from a media acquisition perspective for us,” Caprio told AdExchanger. “We’re tying our creative tools and data together with a buying platform, which we think creates a good entry point for brands that are still struggling to create a mobile-specific strategy.”

Sizmek’s technology centers on digital ad management – ad creation, ad serving, analysis, verification, attribution and data collection. Clients can plug their partners of choice into Sizmek’s platform through an open API. With StrikeAd in the mix, Sizmek is getting closer to its vision of being an end-to-end solution, Caprio said.

“When was the last time you saw a really good mobile ad? We want to help creative agencies and brand managers create rich mobile units regardless of screen size coupled with real, clear audience segmentation,” he said. “You need more than one or two pieces of the equation if you’re going to make mobile work.”

Sizmek plans to integrate its creative tools and its brand-safety platform, Peer39, into the StrikeAd platform. Although StrikeAd will remain separate from MDX – Sizmek’s campaign-management ad server – Sizmek clients will be able to leverage StrikeAd as a DSP, and data, traffic and workflow capabilities via StrikeAd will be available within Sizmek’s ad-management system.

Nguyen told investors that StrikeAd will also allow Sizmek to introduce a self-serve mobile DSP within the next year.

“Our philosophy about end-to-end is that we want to remain open,” Caprio said. “We have DSP partners, and from one perspective StrikeAd will be just another DSP that’s a part of that list. But we’ll also have a separate sales organization that will be focused on the virtues of our own platform.”

In a sense, Sizmek is positioning itself as the anti-walled garden.

“We don’t own the media,” Caprio said, touting Sizmek’s independence. “We have an open ad-management stack that enables us to plug into multiple parties. We’re not a network and we don’t have a vested interest in which media company ends up with the dollars at the end of the day.”

The majority of StrikeAd’s nearly 60 employees, spread across offices in London, New York and Singapore, will stay on board following the acquisition, as will StrikeAd CEO and founder Alex Rahaman, who will lead Sizmek’s platform sales group for the mobile DSP business. StrikeAd had raised $7 million in funding since it was founded in 2010.

According to Nguyen, Sizmek spent nearly 12 months evaluating a “plethora” of mobile and video DSPs before deciding to acquire StrikeAd.

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1 Comment

  1. Are their really a plethora of mobile and video DSPs for Sizmek to evaluate? Maybe a plethora of companies that call themselves DSPs that are not.

    Regardless, good move Sizmek.