Internet Media M&A's Hot Summer Continues

Don More, Updata Advisors

Just like a group of teenagers on the ball field picking choice players to fill out key positions on their teams, the leading internet media companies have been snapping up online ad targets to round out their ability to provide end-to-end services to advertisers, ad agencies, and publishers.  They're all scrambling to keep pace with market driver/disruptor Google, as they build or buy to improve monetization of web assets and capabilities

Here is a round-up of select new media market developments of note:

• A good recent article on ConversionRater.com summarizes the ad-related assets of the big players.  The goal of each of Google, Yahoo, Microsoft and AOL is to become a “superpower” that owns the whole value chain on online media management.  
• Yesterday AOL announced it is acquiring behavioral targeting firm Tacoda, for a reported $275M.  We understand that the deal went for something in the range of a very healthy 10x revenue multiple, which suggests that there were multiple bidders involved in the process.  All of which is great news for Tacoda competitors like Revenue Science and Poindexter Systems, who must be waiting for the M&A phone to start ringing.
• AOL's Tacoda deal follows on the heels of their acquisition of AdTech in May, a German-based ad serving company and ad management platform and Third Screen Media, a mobile ad serving company, that they bought in the midst of the rapid fire acquisitions of DoubleClick by Google, Right Media by Yahoo, aQuantive by Microsoft, and 24/7 Real Media by WPP during the same period.  The terms of the AOL deals weren’t disclosed but the Wall Street Journal (subscription required) reported the price on the AdTech deal was $100M, and they were estimated to have an inventory of around 225M ad impressions and growing, so AOL may have gotten a 'bargain' on the deal.
• For its part, Google has continued plowing ahead on all of its multiple other fronts, with an announcement last week that its offline ad network now includes 225 newspapers.  Google also confirmed that it is rolling out AdSense to mobile, bringing it into direct competition with AOL's Third Screen Media. 
• Yahoo announced earnings last week at the low end of their range and lowered forecasts for 2007.  Google similarly failed to meet lofty expectations.  Monetization of ad traffic is the key to the realm.
• Microsoft just announced a partnership with Ask.com to provide search ads to small businesses across both of their networks, as they try to build larger scale and compete with Google.  Microsoft and Google are both showing commitment to being enterprise service providers with the aQuantive and Postini acquisitions.  
• ValueClick bought MeziMedia last week for $100M (2.5X trailing revenues), bulking up its comparison shopping assets and gaining SEO/SEM capabilities.  At the end of last month, Marchex rolled out OpenList local reviews to its 100,000 domains –  zip code URLs and local sites like NewYorkDoctors.com and verticals like videocameras.com.  These are obviously very specific sites that attract targeted ads, driving better CPMs. 

Stay tuned -- it's going to be a hot summer.