Tremor Video Sells Demand-Side Platform to Taptica for $50 million as Sector Consolidation Gathers Pace

U.S. ad tech company

Tremor Video


TRMR 0.45%

is selling its “demand-side platform” to Israel-based mobile advertising firm Taptica for an enterprise value of $50 million continuing a raft of consolidation in a sector facing stiff online competition from Google and

Facebook
.

Demand-side platforms help advertisers and their ad agencies buy online video ads using automated processes. Tremor Video is retaining its “supply side platform,” which helps online publishers manage and sell their video advertising inventory.

The $50 million price includes around $22.5 million of working capital, which mainly comprises accounts receivable, as Taptica looks to maintain Tremor Video’s relationships with advertising agencies and marketers.

Taptica CEO

Hagai Tal

said the company had looked at other businesses in the sector as it looks to expand its presence geographically and extend its offering in the media-buying space, but it chose Tremor Video due to its scale.

“We are seeing the budget that traditionally went to TV shifting into the digital area and we thought it was the obvious bet for us to grow,” Mr. Tal said.

Tremor Video CEO

Mark Zagorski,

who assumed the role on July 10 this year, said his company will now become more focused, rather than trying to offer services to both buyers and sellers.

Mr. Zagorski said its sell-side video platform grew by around 83% in the last 12 months, with net revenue of around $34 million and a gross margin of around 91% in that period.

“It was a challenge to manage two sides of the business with the kind of scale we had, so we decided to focus on the sell-side where we had solid technology,” Mr. Zagorski said, adding that Tremor Video will have access to about $80 million in capital after the sale, allowing it to continue to invest in its technology, particularly in the area of connected-TV video advertising.

The acquisition marks the latest in a wave of consolidation within the ad tech sector. Notable deals this year have included Sizmek’s acquisition of Rocket Fuel for $125.5 million last month; Dutch telecommunications company Altice acquiring Teads for an enterprise value of up to €285 million ($307 million) in March this year; and Amobee, Singapore…

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