Mobile advertising delivery company Adaptive Medias and programmatic advertising marketplace AdSupply Inc. today announced plans to merge in hopes of better defending marketers and publishers against ad blockers.
According to its letter of intent, Adaptive Medias said it would pay AdSupply $8 million in cash and newly issued restricted stock. As a result of the deal, AdSupply shareholders would own 53 percent of the company, and Adaptive Medias' shareholders would own the remaining 47 percent. The deal, in which the two companies would merge under the name Adaptive Medias, is expected to close during the second quarter of 2016.
Justin Bunnell, CEO of AdSupply, said in a statement that the merger would enable the combined company to better bypass ad blocking.
"With the Internet rapidly migrating to HTML5 video, especially on mobile devices, we must be well positioned in this space and Media Graph is the next generation, state-of-the-art platform that would otherwise take us two or more years to build on our own," Bunnell said. "With AdSupply's larger market position and customer base, this is a classic win-win deal with several powerful catalysts for accelerated growth and profitability."
Last year, Los Angeles-based AdSupply launched BlockIQ, which allowed more than 1,000 publishers to bypass ad-blocking software. On the video front, Irvine, Calif.-based Adaptive Medias' product, Media Graph, lets publishers and content creators monetize videos specially for mobile screens across devices.
The growth of ad blockers is expected to continue: According to eMarketer, the percentage of global Internet users using ad blockers last year rose from 28 percent in the third quarter to 38 percent in the fourth quarter. A report published last summer by Adobe and Irish startup PageFair predicted ad blocking would account for $22 billion in lost advertising revenue in 2015, a 41 percent increase from the year before.
The proposed merger would give the new company enough size and scale to compete in a market likely to experience consolidation, Adaptive Medias CEO John Strong said in a statement. And during its first full year as one company, the new Adaptive Medias would generate revenues of more than $30 million, Strong said.