Shanghai-based private equity firm Innotech has acquired a stake in Ad-Juster, a San Diego-based company that provides a data aggregation platform and reporting system for digital publishers, ad agencies and networks for an undisclosed sum.
It's not the first AdTech acquisition by a Chinese company or probably not even the largest. That honor, as of now, goes to Beijing Miteno Communication Technology, which acquired Media.net for $900 million in cash last year.
But if Innotech's vision of how it plans to use Ad-Juster come to fruition, it could well be among the most interesting of these deals.
The Largest Adtech Ecosystem in the World
Innotech is an 18-month old company co-founded by Oliver Chen, a PepsiCo exec turned AdTech entrepreneur. (Read more.) His plan in a nutshell is this: to build the largest AdTech ecosystem in the world by acquiring best-in-breed technology or nurturing it in Innotech's own incubators.
So far Innotech has invested in a handful early stage startups around the world, which Chen declines to name. Ad-Juster is different in several respects — it is the first US company in which it has invested and the first it has decided to publicly announce.
"What Ad-juster does is help publishers understand what is going on with their advertising data," Chen told CMSWire. "Their technology is unique — it is simply not available in China or the rest of the world."
A Complicated Ad Delivery Chain
Ad-Juster offers mapping technology that is able to automatically reconstruct the ad delivery chain, said Peter Yang, vice president of Product Development at Ad-Juster. The ad delivery chain is an increasingly complex one, he explained, with numerous reports that must be tracked and accounted.
A team of about six people managing six or seven campaigns might well spend more than 200 hours a month just pulling the reports from the ad server, to say nothing of the time involved in reconciling them, he said.
"If there is $10 billion of revenue flowing through a system with an assumed 7 percent discrepancy rate, that is $700 million dollars in potential revenue at risk, that we help reconcile," Yang said. "And this problem of discrepancy hasn't gone away with programmatic either."
Instead it has been pushed down to the DSPs or demand side platforms, which now have to manage their numbers against third party billable numbers. Publishers also struggle with discrepancies even when delivering programmatic through header bidding, according to Yang — those will occur between the primary ad server and the programmatic partner, he said.
Now factor in the new technologies such as video and mobile to the ad delivery chain. Today the need to confirm viewability and new ways to measure success across all platforms has put users on a never-ending treadmill trying to make sense of everything, Yang said.
One area Ad-Juster hopes to explore with its new funding, Yang said, is using its technology in departments beyond ad tech. "There are a couple of directions we would consider. “The first would be to leverage the mapping technology we have built into other areas within our client base that have organization needs with data. Marketing, for example."
Plugging in an Important Piece
So this is the technology Innotech plans to plug into its steadily growing holdings. It will join the other investments the company made in ad technology, marketing technology and data services.
This year the company plans to open a US incubator in San Francisco, where it expects to find another generation of technology to add to its community. "In 2017 we plan to incubate another 10 companies in China and a similar number in our new US incubator," Chen said.
These companies will be very early stage, as in they are starting from zero. "It's a bit different from Ycombinator," Chen said, which is a similar model in some respects. Innotech also has a venture capital arm, which invests in more established companies, but it is the early stage companies that he expects to lead the charge with his global aspirations.
"The tech that is being developed around the world is amazing," Chen said. As for the startups, Innotech is giving them the opportunity to dream of going big, going international right away.
Even a more established company such as Ad-Juster has only a handful of clients oversees and none in Asia, according to Yang. "With the support of Innotech, Ad-Juster is will increase its footprint globally and leverage the technology that has been built here to solve data problems in international markets," he said.