The $60m raised this week by AppNexus, a US-based developer of software to power online advertising marketplaces, came at the end of a string of deals featuring similar companies and indicates the pull of adtech as online advertising models continue to evolve.
Earlier reports suggested that China-based e-commerce company Alibaba was in talks over investing in AppNexus, which has also extended a credit facility with Silicon Valley Bank to $75m, but AppNexus claimed the money came from an undisclosed public equity and asset management firm.
Software company Microsoft is among the previous investors in AppNexus, as are Venrock, Kodiak Partners and First Round Capital. AppNexus added that it is in negotiations with additional strategic investors over increasing the size of the series E round to $100m.
The cash from the round took AppNexus’ total funding to about $200m, and the money was raised at a $1.2bn valuation. It will be used to support ongoing growth that has aleady enabled the company to increase its headcount 43% from the start of 2013 to almost 600 acorss 14 countries.
The growth is representative of an emergent adtech sector which has also seen mobile advertising platform Smaato raise $25m and advertising management company AdStage more than $6m in the current month alone.
Other notable deals in the adtech space this year include the acquisition of Apprupt by Opera Mediaworks, and Twitter’s $50m purchase of Namo Media, as well as the huge $48m series A round raised by China-based Avazu in March.
The interest in these companies comes as online advertising adapts to the shift of online use from the traditional internet to mobile browsing.
Spending on mobile advertising more than doubled to $9.6bn from 2012 to 2013, according to market research company Emarketer, and the need to produce content that is directed towards mobile devices rather than simply repurposed from other online advertising has led to new businesses springing up to develop the dedicated technology to support that approach.
Nor is the growing use of mobile devices the only factor in adtech’s growth. Avazu for instance is notable in that its technology points toward a new model for online advertising based not on clicks but on verifiable information regarding new users or purchases gained through the ads.
The growth of native advertising in online media is also significant, and Twitter’s acquisition of Namo, which enables developers to run native advertising within their apps, indicates a further need for the technology to support that innovation, particularly as several online companies with high valuations, such as Twitter, will likely need to access advertising in order to monetise the popularity of their products.
Although there have been calls from some in the media recently to move away from online advertising to subscription-based monetisation models, it is questionable whether subscriptions will ever be able to drive non-niche online media or services. It is likely that advertising will continue to play an important part in funding online content, and that start-ups will keep on securing funding as they provide the technology to keep the sector growing.