Numerous mergers and acquisitions will take place towards the end of 2020. This week, credit reference firm Experian bought Tapad and location-based specialist Near took over French outfit Teemo.
Both transactions point to one of the most fundamental tectonic changes in the industry in recent years: privacy.
Experian has acquired $ 280 million worth of Tapad from International Telco Telenor as the ratings firm continues its investment in identity resolution services.
The deal comes just four years after the telecommunications company paid $ 360 million for Tapad. The $ 80 million discount came after a time when the ad tech unit turned away from its cross-device retargeting business. Essentially, Tapad acted as an advertising network prior to the acquisition of Telenor. Today there is another revenue model in which data is licensed.
Norwegian company Telenor dumped Tapad at a time when several of the telecommunications companies involved in the ad tech gold rush of the last decade, such as AT&T and Verizon, are reportedly trying to sell those assets.
Terence Kawaja, CEO of investment bank Luma Partners, helped broker the deal between Experian, Tapad and Telenor, saying the $ 80 million reduction in sales price between 2016 and now shows how data protection laws like the EU General Data Protection Regulation have previous business plans changed in space.
“Sometimes M&A is viewed as a zero-sum game,” he said, noting that Tapad had effectively cut its previous ad network revenue to zero since 2016 and built it back up from there.
“Tapad was early to configure GDPR and data protection compliance. They switched the business from media to data, turned it around and brought it back to growth. Telenor decided that Tapad was no longer at the core of their business, and they decided to streamline their asset portfolio. This is a transaction that I think is significant for its size, significant for the dynamics of the digital identity space. “
Future use case
Many telecommunications companies are turning away from their previous ambitions to develop new sources of revenue from the media business – many say margins are simply too small compared to the core telecommunications business. Ratko Vidakovic, principal at the AdProfs advisory service, told Adweek that this was due to privacy concerns.
He said several cross-device service providers that used probabilistic calculations to re-target consumers with cross-device ads have been looking for exits in recent years such as the Adbrain purchase from The Trade Desk and the Drawbridge acquisition from LinkedIn. “Overall, the loss of identifiers made the space difficult. Companies like Tapad relied heavily on third-party cookies [soon to be retired as an ad-targeting tool] and IDFA [Apple’s equivalent for targeting on mobile apps]”Added Vidakovic.
Experian hasn’t detailed its strategic rationale for purchasing the Tapad, but the company and its peers in the ratings industry have made strategic investments in this area over the past several years.
For example, Experian has partnered with InfoSum, a company that uses “data bunkers” to protect user privacy (and which it recently invested in) to support Experian Match and help publishers reduce reliance on cookies on Reduce third-party providers.
Meanwhile, Kawaja urged Adweek to expect more ad tech deals by the end of 2020, but declined to offer more details.
Near Near, a US-based location based services company, it bought Teemo this week, a France-based peer that provides similar services to brands such as Decathlon, Ford and Ikea in Europe.