• by Mark Walsh  @markfwal, August 13, 2013

The merged company would have represented a combined 28.7% share of the U.S. mobile ad market last year -- roughly on par with that of category leader Google, according to IDC data. In addition to adding heft to better compete with the search giant in mobile, Millennial CEO Paul Palmieri said the two companies were a good strategic fit.

Where Millennial is known as the leader in mobile brand advertising, "Jumptap has more of a focus on the performance advertising side of the business,” said Palmieri, in announcing the deal during the company’s second-quarter conference call after the market close.

He suggested that Jumptap would also strengthen Millennial in the rapidly growing area of programmatic ad buying, and through its partnerships with third-party data providers, and cross-screen ad capability through its alliance with 24/7 Media. Jumptap’s network overall reaches more than 218 million mobile users in the U.S. and 439 million worldwide.

With audience profiles of more than 100 million unique users, the smaller ad network will also help Millennial enhance its targeting efforts across different devices, operating systems and demographic factors.

The Boston-based company, which had raised $122 million in venture funding to date, stated earlier this year that it planned to file for an initial public offering in 2013. But the IPO market has been choppy for technology companies, and many mobile companies that have gone public in the last few years have had struggled to meet expectations.

Merging with Millennial may have become an attractive alternative. “There’s no question in my mind that adding Jumptap’s products, people and technology to the Millennial portfolio will further the overall mission of building the leading mobile advertising platform worldwide," said Jumptap CEO George Bell, on the earnings call.

Bell -- the former CEO of early search engine Excite, who joined Jumptap in 2010 -- will become vice chairman at Jumptap after the transaction closes. Millennial also said that top Jumptap executives including COO Frank Weishaupt, CTO Bob Hammond, and Chief Product Officer Adam Siroka will join Millennial's “leadership team” in roles that are still to be determined.

While Millennial last year claimed a far larger share of the mobile ad market (18% versus 10.3%), both companies will benefit by pairing up to take on the growing mobile presence of companies like Facebook and Twitter as well as Google.

"Mobile ad networks are losing market share to publishers, and we expect them to lose even more going forward," said IDC analyst Karsten Weide in April, when the research firm released mobile advertising estimates.

IDC reported that Google (AdMob) was No. 1 last year among mobile ad networks with $243 million in revenue -- followed by Millennial Media, which overtook Apple at $151 million, Apple's iAd ($125 million) and Jumptap, ($90 million).

Facebook led the way among mobile publishers in display advertising, with $234 million in gross revenue, followed by Pandora ($299 million) and Twitter ($117 million). Since then, mobile has become an even bigger part of Facebook’s strategy, accounting for 41% of its ad revenue in the most recent quarter.

The U.S. mobile advertising market overall is expected to grow 77% this year -- to $7.3 billion from $4 billion in 2012, according to an eMarketer forecast.

Under the terms of the Millennial acquisition, Jumptap investors will get about 24.6 million in Millennial shares at their Aug. 9 price. Overshadowed by the deal was the company's announcement of second-quarter results. Millennial reported that revenue rose 44.6% to $57 million from the year-earlier period. Adjusted earnings increased to 2 cents per share from a loss of 2 cents a year ago.

Revenue fell below analyst expectations of $59.2 million, but earnings topped the estimate of a loss of a penny per share. Millennial shares were trading down about 10% in after-hours trading to $7.70, after closing Tuesday at $8.50.