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Millennial Media’s CEO Says Mobile Ad Market Is About To ‘Pop’

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Posted by Tricia Duryee Principal Correspondent from Moconews (http://twitter.com/triciad)

A week after Google (NSDQ: GOOG) bought AdMob for an astonishing $750 million in stock, Millennial Media reported that it has raised nearly $16 million in growth capital.

The two back-to-back events in the mobile advertising space is not a coincidence, said Paul Palmieri, Millennial Media’s President and CEO. “There’s two things that happened in the last week, and that’s a big indicator that something is about to pop here…You don’t put together a funding in a week. We had high interest in the company, and we had a competitive process…The way I look at it is that they are two very independent, but significant things that happened in the span of a week.”

The third round was led by a new investor, NEA, and the company’s existing investors, Columbia Capital, Charles River Ventures, and Bessemer Venture Partners also participated. In all, the Baltimore-based company has raised $37.3 million.

Since being founded in 2006, Millennial has grown its reach to 51.7 million unique mobile users, according to the company’s October report being released today. As part of the report, Millennial claims it reached nearly 80 percent of the mobile web—based on the 64.8 million overall users estimated by Nielsen. Of course, that does not mean that other ad networks didn’t reach those users too. In fact, in a Nielsen report issued for the month earlier, Millennial had the largest audience, trumping Yahoo (NSDQ: YHOO), which had 37.5 million unique visitors; Google, which had 35.4 million; Microsoft’s MSN, which had 34.6 million; and AdMob had 34.2 million. (These industry numbers are compiled by Nielsen, but can not be considered completely accurate because the numbers are self-reported. Nielsen does not distribute the numbers because of the accuracy concerns, but the results are regularly leaked to reporters.)

Asked whether Millennial was considering a sale, rather than raising funding, Palmieri said no. “Great companies are bought and not sold. Based on the valuation that AdMob received, it was bought. I’m focused on my company growing and being the market leader and being as successful as we can be. Whatever happens from there happens.” Millennial will use the capital to expand globally, including in Europe, and hiring engineers and more sales staff. Palmieri said the company was at the point where it was going to turn a profit, but instead decided to delay it for awhile so they can grow faster. They have plans to hire 15 engineers immediately and a handful of people in London, where they already have two employees. Over the next year, they’ll probably double their size of their sales force, although will adjust it based on performance. In general, he said there needs to be more sales people across the entire industry because publishers and advertisers need to be educated about the space. “That number has to quadruple in the next year as an industry, as we educate the number of brands out there.”

Link URL to Moconews:

http://moconews.net/article/419-millennial-medias-ceo-says-mobile-ad-market-is-about-to-pop/



DEALTALK-Google’s AdMob takeover to spark mobile ad M&A wave

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(For more Reuters dealtalks, please double click on DEALTALK/)

STOCKS |  MERGERS & ACQUISITIONS

* Small players seen as targets in coming two years

* YOC, Admarvel, Velti could be snatched up -analysts

By Christoph Steitz and Nicola Leske

FRANKFURT/LONDON, Dec 4 (Reuters) – Google Inc (GOOG.O) prides itself on setting trends and its $750 million buy of mobile advertising group AdMob may be no exception.

A flurry of mergers and acquisitions is on the cards next year in the mobile ad industry as media players are encouraged by Google’s move in their quest for new revenue streams in the fast-growing area. [ID:nN09266163]

Some estimates suggest the market for mobile ads could rocket to $10 billion over the next four years, although expectations vary widely.

Given traditional advertising in mediums such as broadcast television is on the decline, companies such as Microsoft Corp (MSFT.O) and AOL Inc (AOL_w.N) may have to be prepared to pay premiums similar to what Google lavished for AdMob, a company with an estimated annual revenue of just $45 million to $60 million.

Based on that estimate, the acquisition was priced at a multiple of up to 16.7 times sales, the sort of price rarely seen in takeover deals since the heady days of the dot-com boom.

“There will be a period of external growth. You can definitely bet on Microsoft, AOL to make purchases (of mobile ad companies),” Julien Theys, analyst at Screen Digest said.

Players such as unlisted U.S.-based AdMarvel, Millennial Media and Medialets are seen as potential targets, according to Bob Walczak, chief executive of Ringleader Digital, a mobile ad company that has itself received indications of interest.

“There were interesting offers but nothing that our board decided to pursue,” Walczak said, adding venture capital firms were back in the game.

Walczak predicted most of the consolidation will take place in the next two years.

Small players such as Germany’s YOC YOGC.DE and 12Snap as well as Britain’s Velti (VEL.L), which itself acquired Ad Infuse in May, could also be potential targets.

In fact, statements by YOC Chief Executive Dirk Kraus chime with those of Walczak. “It is an open secret that we have been approached on a regular basis by parties that are interested in acquiring us,” Kraus said.

ON THE BACK BURNER

YOC may be particularly interesting, Oppenheim Research analyst Marcus Sander said, as it did not experience the share price rise it had hoped for following the AdMob takeover.

“If you ask me whether or not I was hoping for our share price to rise following Google’s AdMob acquisitions, I say ‘of course’,” said YOC’s Kraus. Since the takeover, YOC’s shares have fallen about 3 percent.

Before consolidation in the sector was put on the back burner because of the global financial crisis and tight advertising budgets, Microsoft and AOL bought ScreenTonic and Third Screen Media, respectively, in May 2007, already betting on a boost in mobile ads with the advent of the iPhone.

Finland’s Nokia Oyj (NOK1V.HE), too, ramped up its mobile ad business with the purchase of Boston-based Enpocket.

The price Google paid for AdMob, however, suggests hopes are higher than previously thought.

“I’m not sure why Google has paid that much for AdMob, but it must be due to their view of the mobile ad’s market growth in the future,” said Oppenheim Research’s Sander.

Some studies on the mobile ad market are particularly bullish, with market research company Heavy Reading putting the global revenue figure for the industry at between $10 billion and $15 billion in 2011, up from $1.4 billion in 2007.

Others are more cautious. Kelsey Group expects mobile ad revenue in the United States to hit $3.1 billion in 2013, while a study by Parks Associates found revenue from mobile ads in Canada and the United States is expected to grow to $1.5 billion in that year.

Either way, most companies in the mobile ad sector are relatively small and any premium would be affordable for big media and IT conglomerates, who will rather buy in than find themselves left out when the market takes off.

“The big companies don’t want to miss the train, which is why further M&A activity is likely,” said Wassili Papas, fund manager at Union Investment.

Whether takeover of mobile ad companies will ultimately pay off in terms of revenue and profits, however, remains a gamble.

Martin Sorrell, chief executive of the world’s top ad agency group WPP Plc (WPP.L), said at the Reuters Global Media Summit: “I think there will be more consolidation in mobile (ads) of course (but) proof of the pudding is in the eating.” (Editing by David Holmes) ((For more on the media summit, click here)) ((christoph.steitz@thomsonreuters.com; +49 69 7565 1269; Reuters Messaging: christoph.steitz.reuters.com@reuters.net))

URL Link to Reuters:

http://www.reuters.com/article/idUSGEE5AM1NF20091204


SAP to buy US software firm Sybase to boost mobile growth ($5.8 billion)

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Company sign for SAPGerman software giant SAP is set to buy a rival, California-based Sybase, giving it a boost in its ongoing rivalry with Oracle Corp.

The Sybase board has rubber-stamped the deal, valued at $5.8 billion (4.6 billion euros), but the approval of SAP shareholders and regulators is still required.

SAP is offering $65 a share for Sybase – a nearly 16 percent premium on Wednesday’s closing price. The all-cash offer is being made by SAP’s US unit, SAP America. SAP said it would fund the purchase with cash on hand and a 2.75-billion-euro loan facility from Barclays Capital and Deutsche Bank.

Focus on mobile market

SAP is the world’s biggest maker of programs for managing business tasks such as accounting. Sybase is the fourth-largest provider of database software. The acquisition will give SAP a high-performance database along with programs that companies use to deliver corporate software to mobile devices. Sybase is also one of the world’s biggest processors of mobile text messages.

Chinese women using a cell phone

The deal represents SAP’s largest purchase since it bought Business Object of France in 2007, for 4.8 billion euros. News of the acquisition sent Sybase shares soaring.

SAP expects the acquisition to give it a better placement in its mobile-devices business and therefore help it gain ground against rival Oracle, which currently has a strong advantage in the sector.

Match made with ‘magic’

“SAP will accelerate the reach of its solutions across mobile platforms,” SAP said in a statement explaining its move. “Sybase’s innovative mobile platform can connect all applications and data and enable them on mobile devices.”

And SAP Co-Chief Executive Bill McDermott said in a conference call with Germany’s DPA press agency: “We don’t need to cut costs to make it work. That’s the magic.”

“We see a huge emerging market for real-time mobile devices,” McDermott said, predicting that the mobile Internet would grow to 10 times the size of the desktop Internet.

jen/AFP/dpa/Reuters
Editor: Nancy Isenson

URL Link:

http://www.dw-world.de/dw/article/0,,5568714,00.html






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