YuMe IPO Start Stronger Than Expected

AOL news doesn't hurt the share price

YuMe is the latest of several ad tech firms to go public—Tremor has its first earnings call this week, in fact—but an open question is whether it's better to get bought by a larger parent like AOL just did with Adap.tv, or to try your luck with the open market.

The company's chief marketing officer Ed Haslam told Adweek today that the IPO route offered YuMe some distinct advantages.

"We chose to go public because we want to operate as an independent company and increase scrutiny as we start doing business with larger advertisers," Haslam said. Big spenders, he opined, want the kind of transparency that comes with having to report to investors every quarter, and a publicly traded stock would give YuMe "the currency to expand." That means both new customers, and new countries, Haslam added.

It's worth pointing out that YuMe is actually quite a bit more valuable than many of its competitors. Companies of all sizes exist in this marketplace, of course, but the attention, say, Tremor has gotten for a comparatively much smaller IPO is a little strange. YuMe priced its stock below expectations but saw an immediate rise in share prices; the stock traded at a high of $9.85 and a low of $8.73, ending the day at an even $9.

Startups don't generally enter the stock market to make an immediate killing; venture capital partners Khosla Ventures and Accel Capital together own some 34 percent of the company together, and VCs tend to want their money back at some point. So YuMe had to embark on something of an educational campaign over the last few weeks, telling potential investors exactly what the company does.

"Our CEO and CFO just came off their road show where they had to do that for almost ten days," said Haslam. "It's a challenge to create a message that a person can understand; we think we did a pretty successful job of that, give a set of investors we put together who are buying the stock."

Buying YuMe, he said, isn't buying a site list or a channel. "You're buying an algorithmic value of this particular placement," said Haslam. Not exactly Lockheed-Martin. But is that so wrong?

Haslam also said the company is working with companies that produce sexy technology—new software for Google Glass and other emerging technologies help to sell the high concepts to investors. And, of course, there's the kernel of the pitch: "We're growing faster than the market," Haslam said.