Mediaocean LLC has agreed to acquire advertising-technology shop Flashtalking, as the company known for its ad-agency billings software adapts to a future dominated by digital media consumption.
The two companies announced the purchase. Majority-owned by Vista Equity Partners, Mediaocean will pay $500 million for Flashtalking as the company sets its sights on an initial public offering next year, according to people familiar with the matter.
Flashtalking generates between $100 million and $150 million in revenue, the people said.
The acquisition—Mediaocean’s 11th and largest purchase since it was bought by Vista, Mediaocean said—is part of a recent boom in the adtech sector, reflecting a surge in digital ad spending and changing habits by consumers who are spending more time online shopping, reading and entertaining themselves.
Mediaocean, used by marketers and ad-buying agencies for ad billing, planning and buying, said it expects to process about $200 billion in ad billings this year, $70 billion of it in TV, $100 billion in digital and the remainder in “out of home” channels like billboards, bar promos and others.
“A lot of people, when they think of Mediaocean, think of back-office and billing. Ten to 20 years ago, it was a lot of television,” said Bill Wise, the company’s chief executive. “That has shifted.”
“On the TV side, all you need is a Mediaocean and Nielsen account and that’s the supply chain,” he said.
But in digital advertising, the list of companies involved in targeting, serving and assessing the quality of ads is much longer and more complex, he said. “Mediaocean decided it wanted to be more involved in that supply chain,” Mr. Wise said. “Flashtalking is a foundational deal for us.”
Flashtalking touts a digital ad server, technology that manages and customizes digital ads, and a product for ad quality verification that competes with shops like DoubleVerify and Oracle’s Moat, it said.
The company, which counts Adobe and Procter & Gamble among its clients, has also expanded its ability to target ads without relying on cookies, it said; many companies are taking that route as Google prepares to remove third-party cookies from its Chrome browser. Cookies are data files embedded in browsers that advertisers use to buy targeted digital ads.
As part of Mediaocean, Flashtalking’s capabilities will support ad buys on the open web and in connected TV, said Mr. Wise, complementing tools from 4C Insights Inc., a company Mediaocean bought last year for more than $150 million.
4C was known for audience data and planning tools for streaming video and social media. The company helped marketers target ads with the so-called walled gardens that control much of the data and buying process, like Google and Facebook.
Vista bought a majority stake in Mediaocean for about $720 million in 2015. A few years later, the private-equity firm explored a sale of Mediaocean that could have valued it at more than $1.5 billion, but no deal materialized.
Instead, Mediaocean has focused on doing its own acquisitions, according to Mr. Wise. “We’re betting on ourselves,” he said.
The Flashtalking deal is expected to close in the third quarter of this year, the companies said.
Originally published by the Wall Street Journal