Forecast: InMobi-AerServ Deal Just One Of More To Come

Get ready for a lot more consolidation in the mobile ad-tech sector in 2018.

That’s what I’m hearing from numerous execs, including Abhay Singhal, co-founder and Chief Revenue Officer of mobile ad platform InMobi.

“The advertising industry in mobile is at a mature stage, [and] it’s an extremely crowded space,” Singhal told me last week. As such, “It’s becoming harder to achieve the scale,” Singhal said. “Smaller players won’t be able to grow, [because it] requires too much money and time they don’t have.”

That may be why AerServ just agreed to get gobbled up by InMobi for $90 million in cash and stock.

“We bring the scale,” Singhal said regarding the deal, which was announced on Wednesday.

For InMobi, adding AerServ means more access to U.S. publishers and brands, which it hopes to attract with its large international presence.

The deal is a boon for InMobi’s ad exchange scale, since AerServ runs more than 90 billion ad opportunities each month, and provides access to roughly 2,000 mobile apps.

The combined companies can also offer traditional ad mediation with brand demand, which Singhal sees as a unique offering.

“There is an immediate benefit that we can deliver to over 60 publishers, globally,” Singhal said.

Setting AerServ apart from other mediation platforms, Singhal also believes that the southern-California-based startup successfully figured out how to implement header bidding in an in-app ecosystem.

Throughout much of 2017, the mobile ad-tech sector was obsessed with header bidding and ways to implement what has historically been a desktop model.

With significantly higher yields at stake for publishers, the race was on to find scalable solutions.

“Every other mediation platform that exists, today -- which is relevant for to in-app ecosystems -- does not solve this problem,” Singhal insisted. “AerServ did.”

Going forward, Singhal promises that publishers will be the real beneficiaries of InMobi’s AerServ acquisition.

In recent years, “Header bidding proved that if [publishers send their] request concurrently to every one of the buyers … it ends up resulting in 50% to 60% improvement in yields,” he said.

With AerServ’s 70 employees, InMobi is growing to a combined workforce of 950 -- 130 of whom will be based in the U.S.

Of course, the stakes couldn’t be higher for InMobi and its rivals. Over the next two years, the spend for ads sold programmatically will increase from $57.5 billion to $84.9 billion, according to a recent Zenith forecast.

“These are very interesting times for us,” Singhal said.

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