How the CEO of buzzy TV-measurement firm Data Plus Math made a fortune from fighting Facebook and Google and sold the company for $150 million
- TV-tech entrepreneur John Hoctor sold his startup, Data Plus Math, to LiveRamp last month for $150 million, equivalent to a multiple of 24 to 30 times revenue.
- Hoctor said that he was in the process of raising a "large" round of funding to expand its staff when he was approached by LiveRamp.
- Data Plus Math is the third TV data firm that Hoctor and cofounder Matthew Emans have worked on together, and the two zeroed in on helping TV networks challenge Facebook and Google.
- Other measurement firms are focused on TV, but Hoctor said its focus on network clients and a software-based business have kept Data Plus Math ahead.
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TV advertising-tech is red hot these days, and John Hoctor hit the jackpot.
In June, the CEO of TV analytics company Data Plus Math sold his firm to ad-tech company LiveRamp for $150 million. At just three years old with $5 million in projected revenue, Hoctor and his co-founder Matthew Emans sold the company for 24 to 30 times revenue, making it a rare high exit for advertising startups.
The acquisition shows the growing appetite marketers and investors have for technology that promises to shake up the decades-old practices of buying, selling and measuring TV ads. Advertisers, especially digital-native companies that are starting to spend on TV, want to better understand how their ads drove sales as people cut the cable cord.
"Clearly LiveRamp sees a lot of future potential for this deal. That is why it is paying up this much premium for the deal," said Rafat Ali, founder of travel-media company Skift and a frequent commenter on valuations, at the time of the acquisition.
Since announcing the acquisition, which is expected to close during LiveRamp's fiscal second quarter, Hoctor has stayed quiet in the press. He said Data Plus Math, which has around 25 employees and raised $7.5 million since 2016, was preparing to raise another "large" round of venture-capital money this year when LiveRamp showed up.
"We were definitely not for sale when the LiveRamp acquisition happened," he told Business Insider. "We were on such a large trajectory that we needed to expand our team - we were opening up job reqs."
A few factors worked in favor of a deal. Both companies were focused on solving data-based advertising. Hoctor knew LiveRamp CEO Scott Howe from working together at Microsoft, though he stressed that the relationship did not affect LiveRamp's decision to acquire Data Plus Math. Hoctor had also worked with LiveRamp. In exchange for providing TV reporting for LiveRamp's clients, Data Plus Math used the ad-tech firm's technology to anonymously match advertisers' data with its own data sets.
Hoctor has a history of disrupting TV
Data Plus Math's acquisition isn't a fluke.
Hoctor and Emans are longtime entrepreneurs and business partners who have worked in television since 2001. They met while working at TV-targeting firm Navic Networks, which Microsoft acquired in 2008 for reportedly more than $200 million. Then they founded a data startup called IntegralReach, which they sold to Rovi (now known as TiVo) in 2013. They left Rovi at the end of 2015.
Six months after leaving Rovi, the two started plotting Data Plus Math. Advertisers were starting to move TV budgets to digital and ask more about the performance of their TV spots. The pair saw an opening to focus on measurement.
"We were like, 'Why would we leave this industry right now?'" Hoctor said. "We got very lucky with the timing - it became a hot topic quickly."
The promise to help TV networks and advertisers challenge Facebook and Google became key to Data Plus Math's pitch, Hoctor said. For years, the duopoly had pitched advertisers on granular targeting that directly linked with marketers' goals, and when someone bought a product after clicking on a Facebook or Google ad, Facebook and Google got all of the credit for the sale, regardless of whether that person had seen a TV commercial or print ad before clicking the ad.
"Advertisers know that TV works, but they haven't had the granular reporting to understand what parts of it were working better than others," Hoctor said.
While other startups chased advertisers, Data Plus Math first set its sights on networks, signing A+E Networks and NBCUniversal as clients.
"That strategy paid immediate dividends because nobody was focusing on them from an attribution standpoint," Hoctor said. "We got to work with some of the largest agencies and marketers through our partnerships with the networks."
Many TV-tech firms want to shake up TV
Data Plus Math is part of a growing cottage industry of TV-focused startups that help marketers track metrics like attribution and sales by matching up ad exposure with data. Similar companies include Neustar, 605, iSpot, and Nielsen.
The differences between TV-measurement companies are often small and nuanced. For example, Hoctor said that competing firms price their offerings on a campaign-by-campaign business and can track how many people went to a website within a month of seeing a TV ad.
Data Plus Math uses a software as a service (or SaaS) model that charges clients monthly for access to its analytics. As a result, Data Plus Math says that it can match larger TV data sets that take time-viewing into account and mesh it with sales logs and other data that shows what consumers do after seeing an ad.
Under LiveRamp, Hoctor said that Data Plus Math will act as an independent measurement company and LiveRamp will continue to work with other measurement firms.
"We've got a really nice lead and I don't see anybody close in our rear-view mirror," Hoctor said.