ADOTAS – Cox TMI, Inc. has acquired Adify for $300 million, Adify’s CEO, Russ Fradin confirmed today. Adify will continue to operated as a stand-alone company and Fradin will remain on board as president.
According to Fradin, no heads will roll – on the contrary, “tons of investment and new hires” are planned.
So how did this all come about? “We were raising our Series C, it was going very well, lots of term sheets from great investors,” Fradin wrote over e-mail. Then “Cox came along and made an offer.” He said that while Adify wasn’t hoping to get snapped up, the symbiotic nature of the deal was irresistible. “Great company, great fit, love the culture,” Fradin added. Adify was in talks with Cox for about 10 weeks before the deal was officially sealed.
Industry watchers agree on one thing: it’s a good thing for ad networks. Other than that, the industry response has been all over the map.
One industry exec who preferred to remain anonymous expressed surprise at the large size of the all-cash transaction considering the fact that Adify’s revenues were reportedly only about $7 million. The executive added that the deal could be an important – and auspicious — precedent for other ad network acquisitions.
But another executive thinks Cox got a pretty sweet deal considering the whole package: “Adify has done a great job building a platform to empower the rapid acceleration of vertical ad networks. They have had great marketing behind them and team with tremendous industry experience.”
Michael Sprouse, the chief marketing executive of Epic Advertising, says Cox made a smart strategic move: “Some people might see Cox as an unlikely buyer, but this seems to fit into a well thought-out strategy by them and points at the tremendous value-add that targeted ad networks can bring to large media companies who need to establish proficiency and scale in their online marketing business.”
The CEO of Burst Media, Jarvis Coffin, is excited about the implications of the acquisition for the vertical ad network as a whole: “This is an important validation of the vertical ad network model, one that we have invested our efforts in since we started in 1995. … This recognition of the value of interest-based content and the ability to manage the complex relationships between these publishers and their advertisers is the part that is hard to do.”
Coffin recognizes a potential downside of the buy for Adify though. “This acquisition removes some level of independence that Adify had in building networks for anyone who wanted one,” he said. “They have some competing networks on their roster, and ones that may compete against Cox’s own businesses. It will be interesting to see if they are able to sustain competitive ad networks on their platform if they are supporting the ad sales efforts.”
Cox TMI, a subsidiary of Cox Enterprises, Inc., for one, says it’s looking forward to leveraging Adify’s 100-plus vertical advertising networks and champions the company’s vision and innovation.
“Adify’s commitment to customer service and innovation in powering vertical advertising networks for its customers has been key to its success and is a great match for Cox, a company that has served the advertising community for over a hundred years through its various media platforms,” said John Dyer, executive vice president of finance at Cox Enterprises, in a release. “As part of Cox, they will continue serving the media industry with their spirit of entrepreneurship, innovation and service. We’re confident the advertising community, Web entrepreneurs and many of our own companies will directly benefit from our new association.”
Fradin goes into detail about many aspects the deal on Adify’s blog, but this sums it up:
“Although Adify was not seeking an acquirer, Cox’s history, resources, and people demonstrated that it would be a very compatible business partner and the perfect home for our company. Cox is a 100+ year old diversified media company with a long history of investing in new media businesses, serving the advertising community and, above all else, a company-wide dedication to customer service. Their known reputation for superior service all starts with a deep commitment to investing in their employees. Operating Adify independently within Cox will enable us to continue building Adify by giving our company considerable new resources to deliver superior value to our customers and to compete in the online advertising marketplace.”