Mediaocean Floats IPO (Is There An App For That?)
Fresh on the heels of high-profile public “exits” by some of Madison Avenue’s biggest suppliers, most notably Nielsen, another one of the ad industry’s near monopolies is planning an IPO. Mediaocean, the company that was formed by the merger of Madison Avenue’s two biggest data processors -- privately held Donovan Data Systems and VC-backed Mediabank -- is “absolutely preparing ourselves for an IPO,” its CEO Bill Wise tells Forbes.
Noting that Mediaocean reportedly was worth $1.5 billion when its merger was completed, and that it currently has annual fee revenues of $200 million, the Forbes piece speculated its IPO could be worth “well over a billion” and would likely fuel the values of other ad technology firms planning to go public.
Generally speaking, the recent IPOs of ad tech players has been a little underwhelming by Wall Street standards, with shares declining, not rising in value, but most of those players -- companies like YuMe, Tremor Video, Rocket Fuel, etc. -- are basically just ad networks that don’t have an exclusive stranglehold on the ad industry the way, say, Nielsen or Mediaocean have had.
In fact, Mediaocean is more analogous to Nielsen than other ad tech players, although it is trying to position itself as an ad technology company, because it is uniquely tied in as a subcomponent of Madison Avenue’s infrastructure: most of the media buys, bill payments, accounting and even payroll systems used by the big agency holding companies are processed through Mediaocean, and as its predecessor companies Donovan and Mediabank proved, it's very difficult to dislodge those even in this era of open sources and cloud computing.
Meanwhile, Mediaocean is also announcing its first big push to fulfill its promise to become not just a data processor, but Madison Avenue’s “operating system,” this week announcing plans to build an Apple like app store for developers to sell new bells and whistles to help agencies plan, buy, manage and process their media and other advertising assets.
Dubbed the Connect Partner Platform, Mediaocean says it will enable data and technology developers, including “ad servers, data solution providers, supply businesses” and others to “increase their revenue opportunities by easily deploying services on Mediaocean software used by the world's largest agencies.”
Noting that it currently processes about $130 billion in global advertising buys handled by about 80,000 agency pros, the app play represents a big shift for Mediaocean, which previously focused mainly on improving data processing and workflow.
“Via open APIs, streamlined interaction consoles, a developer Web site, and related offerings,” will make the new app platform a clearinghouse for “agencies to discover, access, and orchestrate partners within applications and interfaces,” the company said in its press release announcing the initiative.
Among the partners Mediaocean lists as participating in the platform's launch are: ad servers Atlas, eyeReturn, DG MediaMind, Phluant, PointRoll and Trueffect (but not biggies like DoubleClick); “data solution providers” comScore, SQAD, Triton Digital, Visual IQ and Nielsen Catalina Solutions (but not Nielsen overall); media inventory “suppliers” NCC Media and Pandora; “technology providers” ADstruc, Comcast AdDelivery and FreeWheel.
“I think Mediaocean’s IPO says -- to the industry -- more about them looking to leverage those business relationships into new revenue streams,” says Brian Wieser, an equities researcher at Wall Street's Pivotal Research Group, and a former Madison Avenue insider at Interpublic. “I don't think that the company would be moving down the direction it is if it weren't looking for top-line growth from new sources (i.e., from publishers).”
While that's a good rationale for going public, the reason for tapping public markets may have less to do with raising capital to fund that growth as much as it has to do with generating a return for its founders, investors and managers, much the way Nielsen's private equity investors and top managers have cashed in on its IP0.
“You can argue -- I certainly would -- that exits are nothing more than part of the process of investing capital and realizing returns on that capital,” Wieser says pragmatically, adding: “Using public equity markets vs. private ones and equity vs. debt involves a range of considerations, but mostly they are about (if you are the issuer) finding the source of capital willing to provide capital for the least cost.”