The move suggests Twitter is ramping up to launch its own mobile ad exchange, as we noted back in March.
The buy marks yet another step in the consolidation of the mobile adtech landscape. Millennial Media just acquired Jumptap, for instance. There is widespread agreement that there are too many mobile adtech companies, doing very similar things for advertising clients, and that companies must now either dominate the market, acquire, be acquired, or die. Techcrunch reported that Millennial was also a bidder for MoPub.
What's interesting about both deals is that in neither case has any cash changed hands - both are all stock deals. That suggests mobile adtech companies are not, perhaps, as valuable as their venture capital funders had hoped they might become. Having said that, MoPub had taken only $18.5 million in funding and, we understand, was largely profitable on an operating basis.
MoPub certainly looks like it got the better of the two deals - Twitter is widely expected to file for an IPO before the end of 2014 and its stock launch will be huge. (Jumptap, however, receeived Millennial stock which has performed poorly of late.) In short, MoPub's funders may have just exchanged their $18.5 million in MoPub equity for $350 million in privately held Twitter stock - a sweet deal.
We asked MoPub CEO Jim Payne for comment; we'll update this item when we hear back from him.
In Twitter's world, MoPub is a small acquisition. Although MoPub claims revenue of $100 million, that is gross billing adspend, or pass-through revenue, not net revenue (which the company actually keeps). An estimate of one third of gross would imply net revenue of ~$33 million, but the company declines to confirm that. It has 70 employees.
Twitter by contrast is expected to hit $1 billion in revenues in 2014, largely from mobile. So why might Twitter want such a small business, especially when it runs a much larger mobile network offering?
This is all speculation, of course, but ... The answer may lie in the fact that MoPub has technology that Twitter does not, namely a demand-side ad buying platform (a so-called DSP) and a real-time bidding publisher network.
Twitter is widely expected to launch a mobile ad exchange, in which users arriving inside Twitter could be targeted based on their previous web or mobile usage history. MoPub's DSP would have the technological capability to place buys inside such an exchange. Similarly, if Twitter wanted to create an off-site ad network - allowing advertisers to target Twitter users as they browse on other sites - then MoPub has that tech on tap, too.
MoPub also has a location targeting business in a partnership with Placecast. Twitter, obviously, would find that kind of targeting interesting too.