District M And Sharethrough Merge To Form Single Exchange

exchange mergerDistrict M and Sharethrough will merge to form a single exchange covering native, display, mobile, instream and video.

Their combined scale serves a dual purpose. First, it puts them in a better position with buyers, who are working with fewer, but larger exchanges. Second, the two companies will double their revenue, putting them in a better position to potentially go public.

“The market is so positive right now about this category. Advertising is being truly valued again,” noted Sharethrough CEO Dan Greenberg, who will become president of the combined company.

Other exchanges have been acting on the market optimism about ad tech: Magnite acquired the video exchange SpotX last week to form a omnichannel ad exchange with a heavy video focus. And PubMatic went public in December, and has seen its stock go up by 66% since.

As part of the merger, District M raised $19 million in Series C funding from existing Canadian investors, the Fonds de solidarité FTQ (FSTQ), Investissement Quebec (IQ) and Export & Development Canada (EDC).

“This is an opportunity for both of our companies to significantly grow revenue and our publisher footprint with an omnichannel strategy,” said District M CEO JF Cote, who will lead the combined company.

Fast-forwarding to growth

By combining, District M and Sharethrough will double their revenue, publisher imprint and headcount.

The two companies together will employ 140 people. According to LinkedIn, District M’s headcount has declined 8% over the past two years, while Sharethrough’s headcount has declined 37%.

Sharethrough listed a headcount of 92 when it received a PPP loan in April. Its headcount at the time of the merger was 64 people.

Moving to a fully programmatic business, closing its UK office and moving customer support to New York all led to staffing reductions, Greenberg said.

The declining headcounts speak to the challenges faced by smaller exchanges. Header bidding means that an exchange’s unique access to inventory is mostly a thing of the past. Buyers are doing supply path optimization and paring down the number of exchanges they work with.

Exchanges like Sharethrough’s, that specialize in a single format, native, are more likely to hit the agency chopping block. And smaller exchanges – like District M and Sharethrough separately – are also more likely to get cut as buyers do supply path optimization.

A merger helps stave off agencies from cutting them. Combined, the two companies will be the fourth-largest, independent, private exchange, Greenberg said. Companies that aren’t among the top-ranked exchanges are most likely to get cut.

“To operate at this level of scale gives us a seat at the table,” Greenberg said.

Cote said the merger will address these marketplace issues and better position the exchanges with publishers and buyers.

“For advertisers, the most strategic partners are the ones with the most scale and performance,” Cote said in a statement. “Our combined company is that partner, built for the modern advertising ecosystem.”

Even pre-merger, Greenberg said both companies made it through 2020 in relatively good shape. Though the pandemic made for a “tough” Q2, “we roared back in Q3 and Q4,” he said. Both District M and Sharethrough turned a profit last year, he added.

Post-merger, District M will move its accounts and partnerships onto Sharethrough’s platform, STX. Together, the merged exchange will reach 40,000 publishers, giving advertisers more scale than before. The combined company also plans to add CTV to its roster.

Greenberg said that the two exchanges’ publisher imprint wasn’t highly duplicative. “Even for publishers that overlapped, we had different access to different slots, or were on the app vs. the article pages,” or they worked with different buyers – all signs that a merger would lead to further growth.

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