Mike Seiman's Blog

So what is an ad network's take on the recent acquisition of Invite Media by Google? What do other DSPs think of the acquisition? Was 70 million a good number, an okay number or a great number? What does Google plan to do with them, and why did they buy them? I can't answer all these questions, and most are just my opinions, but I'll take a shot.

Being in this space so long, one tends to know things, such as what margins your competitors take. I've heard through the grapevine that the average DSP takes 15%, so let's assume what I've heard about Invite getting 12x net revenue is accurate also, and we can assume Invite was managing somewhere between 35 and 40 million in revenue. Considering the overall landscape of online display, this is a small number. So, why did Google rush to acquire them? Do they see a lot more revenue coming from this channel, or did they just want to bury it before it took off? What doesn't add up for me is, if Google thinks enough revenue is coming that it's worth 70 mm to buy it, then why did the VCs and owners collectively decide to sell out so short? One can assume if display continues to ramp worldwide, and a platform like Invite could manage 1 billion in ad spend, then they could be doing 150 mm in net revenue and be worth over a billion.

So what am I missing here? Is the reality that no one values DSPs as much as the hype? Are there hinderances that we don't see or know about since we're not on the inside, that would prohibit them to ramp up so heavily? Not to mention, will holding companies like Publicis really accept Google managing their buys across multiple exchanges, including their own? Does this leave Cadre On and Vivaki without a home? Are they going to build their own Invite and that's why they didn't try to acquire?

I, for one, don't know the answers to all these questions, but as a strong company in the display space, I'm certainly glad Google is spending 10+x multiples of net revenues on companies in this space. At the end of the day, good for Invite, good for Google, but something doesn't seem right to me. What about you?