TechCrunch by Ingrid Lunden
Verizon isn’t the only carrier that wants to ramp up in ad tech to complement (and offset) its legacy business. Today, Norway-based Telenor announced that it has acquired Tapad, a New York-based cross-device retargeting startup co-founded by two Norwegians, Are Traasdahl and Dag Liodden, for $360 million “on a debt and cash-free basis.”
The price covers 95% of the company. Traasdahl and Liodden are together keeping the remaining 5%. The deal is expected to close Q1 2016, subject to regulatory conditions. On paper it represents a big premium on the amount the startup raised: just under $34 million in four rounds of funding. It’s not clear what valuation Tapad had before its exit.
Tapad was backed by Spring Capital (which owned 46.5% of the company), FirstMark Capital, Firsthand Technology, Avalon Ventures, WPP and Metamorphic Ventures. Traasdahl, notably, is the president of Spring Capital, according to his LinkedIn profile.
Tapad was founded in 2010 and focuses on cross-device marketing technology: it tracks what it says are billions of data points across multiple screens — think mobile, PC, TV, and more as they come to market like watches, cars and so on — to gain a better sense of where consumers are going and what they are doing online.
It then packages and sells that information to media buyers, brands and other advertisers in order to create better targeted advertising, to feed into what Tapad estimates is a $160 billion digital advertising market.
As mobile carriers face increasing pressure on their core, legacy offering of voice services, and basic data gets cheaper and cheaper for consumers and becomes a thinner margin business, these carriers are looking to add more services on top of the network, leveraging their own subscriber bases but potentially also providing services that work across other networks, too.
“With the acquisition of Tapad, Telenor Group is taking a position within the rapidly growing market for advertising technology, and securing important competence within digital marketing and analytics. I believe significant value can be created from applying marketing technology to improve the digital capabilities of our core telecom business. This will improve our understanding of customer behaviour, and supports building a platform for other business areas,’’ says Sigve Brekke, Chief Executive Officer of Telenor Group, in a statement.
This is Traasdahl’s second exit: previously he sold a music startup called Thumbplayto Clear Channel, where it became a part of iheartradio (and then in 2014 Clear Channel renamed itself iHeartMedia to reflect its wider strategic direction).
There has been a lot of heat over the ad tech industry and how it potentially compromises user privacy. And on top of that, the massive amount of targeting, pinging and cookies make the experience of using services very slow and data-heavy, which has led to the rise in popularity of ad blockers. For what it’s worth, Tapad says that its Device Graph respects data privacy, working with anonymized data.
It sounds like Telenor primarily intends to use the tech across its own footprint, which is not only in Norway, as its name might imply: the company is also very active in emerging markets like Vietnam and Burma, where mobile networks are only just starting to hit the big time with services that are not cost-crippling to the vast majority of residents.
“We are thrilled to join the Telenor family. With more than 200 million mobile subscribers in 13 markets, Telenor is one of the largest and most successful telecom companies globally. I am excited by what this acquisition means for our employees, our partners and our continued growth. This will accelerate our vision to become the worlds’ leading provider of unified digital marketing solutions,” Traasdahl said in a statement.
But this doesn’t mean that Telenor will only be using the technology for its own audience of subscribers: Tapad says it works with 160 of the top U.S. brands and has inked 50 data technology licensing partnerships. In 2015, the company is expected projects it will have revenues of $57 million, up 70% versus 2014. It is however loss making with a negative EBITDA of $12 million. It forecasts 2016 revenues of $90 million, and “Telenor expects Tapad to reach EBITDA break-even in 2017.” Tapad has approximately 160 employees, with offices in 13 key cities in the U.S. and Europe.
“Telenor’s ambition is to deliver a broad range of relevant, personalized and engaging digital services for our customers, as well as to improve efficiency by further digitizing our core business, including important areas like sales, marketing and distribution,” the carrier said in its statement on the deal. “Telenor has previously taken positions within new digital business areas within the Internet of Things, Online Classifieds and Financial Services. The acquisition of Tapad will give Telenor a solid position within advertising and marketing technology and strengthen Telenor’s data analytics capabilities significantly.”
Tapad will operate as a stand-alone company under Telenor. Traasdahl, the current CEO, and Liodden, CTO, will maintain their positions. The company has 160 employees.