Programmatic Companies Taptica and RhythmOne Merge in $176 Million Deal

In a sign of the ongoing contraction in the number of ad-tech companies, Taptica and RhythmOne today confirmed earlier reports of a deal between the two programmatic outfits which have carved out a niche in the video markets. Taptica, which is headquartered in Israel and listed on the London Stock Exchange, is purchasing RhythmOne, which is also traded on the LSE but headquartered in the U.S., for $176 million in a deal that will see investors in the former outfit hold 50.1 percent of the enlarged group, according to the financial press. The all-stock deal is still pending shareholder approval and expected to go into effect in early April, after which RhythmOne will cease to be publicly traded on the London Stock Exchange. Both companies have pursued a mobile-first narrative in recent years, pitching the new offering as an independent ad-tech solution consisting of capabilities amassed through previous mergers and acquisitions. This includes 2017 purchases that saw Taptica take Tremor Video's demand-side platform off the public markets and a similar transaction by RhythmOne with its purchase of supply-side outfit YuMe. Ofer Druker has been CEO of Tremor Video DSP and will become CEO of the enlarged Taptica following the resignation of Hagai Tal as Taptica chief executive in December 2018. Tal resigned after he was found liable for misleading statements in the sale of a separate company. Rivi Bloch is currently the interim CEO of Taptica. Druker said in a statement that the company’s combined assets would enable it to pursue a niche in the connected TV market given Tremor Video DSP’s experience in TV retargeting. "RhythmOne will also add to our media exchange capabilities through its PMP [private marketplace], helping us offer enhanced reach, quality and results,” he added. The statement also points out cross-selling opportunities between the proposed pairing with the business models of Tremor Video DSP potentially able to scale, given YuMe’s inventory as well as RhythmOne’s audience data and analytics capabilities. Early reports of the deal billed the union as a potential independent full-ad stack to rival Google-owned YouTube when it comes to offering advertisers video inventory. "We all know that video is the main trend in online video advertising right now … both companies [involved in the deal] have created a very interesting ecosystem of data partners plus verification partners," Druker told Adweek. Sources told Adweek that after the merger, Taptica may seek to carve out a niche role as the go-to direct-response solution for media buyers after mobile and video inventory. When asked what unique selling point the larger Taptica group hopes to offer media buyers, Druker said, "I think our offering will run between audience targeting and especially TV retargeting, and on the other side, it will be CTV [through its YuMe relationships]." Ana Milicevic, a principal and co-founder of Sparrow Advisers, a consultancy specializing in ad tech and mar tech, said competition in the CTV and OTT space will be intense in the years to come, especially as major players such as Google and Amazon pursue a larger foothold. “It's important to distinguish who really has the necessary combination of quality inventory, connected channels and ability to execute,” she said. “While ad buyers will often voice that they'd like to see alternatives to Google's dominance in video, challengers need to bring a clear value proposition to the market to even be considered as a somewhat realistically viable competitor."