Private equity firm O3 Industries just paid $18 million for Sizmek's contextual-targeting business, beating out ad-tech firms The Trade Desk and Zefr. Here's how its new leaders think they can fuel privacy-safe advertising.
- Bankrupt ad-tech firm Sizmek has sold Peer39, a contextual advertising company, to private-equity firm O3 Industries for $18 million.
- Peer39 got four offers during an auction in New York last week. Other bidders included ad-tech firm The Trade Desk and video ad firm Zefr, according to sources.
- Peer39 will be led by former Sizmek exec Mario Diez as CEO and Alex White, who previously led Sizmek's product and account teams, as chief operating officer.
- They said they see a big opportunity for contextual-based advertising as marketers prepare for regulation and privacy laws.
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A private-equity firm won an auction for Sizmek's contextually-based advertising firm Peer39, which will be run by two former Sizmek executives.
Bankrupt ad-tech firm Sizmek has sold off pieces of its business this year, to companies including Amazon and Zeta Global. Today, Sizmek finalized the sale of Peer39 to O3 Industries, which will operate Peer39 as a standalone company. Former Sizmek execs Mario Diez and Alex White will lead it as CEO and COO, respectively.
Four companies bid for Peer39 in an auction this past week, according to sources. Winning bidder O3 Industries is acquiring Peer39 for $18 million, up from the $13 million that was previously agreed on in July.
The other bidders included programmatic ad-tech firm The Trade Desk, according to four sources close to the situation; and Zefr, a company that specializes in contextual-based video ads. Zefr recently sold off its rights management business for $90 million to Vobile Group to focus on its contextual targeting tools for advertisers.
"Zefr is focused on the growth of our contextual platform, and evaluated how Peer39's legacy technology could evolve," the company said in a statement. "We're continuing to seek strategic opportunities as they arise."
The Trade Desk did not respond to requests for comment.
Former Sizmek execs want to build Peer39 up
O3 Industries also owns glass facade company Antamex International, Inc. and is run by CEO Jeremy Ozen, according to its website. Ozen is the co-founder of out-of-home advertising firm Vistar Media.
The team is acquiring Peer39's existing technology, clients, and 20 employees. The company plans to hire for sales and account management, product and engineering roles and will have offices in New York, London, Poland and Israel, Diez said.
The process of acquiring Peer39 started four months ago, Diez said. He and White had been consulting for advertising and marketing companies and were interested in Peer39's technology that places ads on publishers' websites and apps that are relevant to the editorial content someone is reading.
As ad-tech firms and marketers clamp down on third-party data due to privacy regs like the California Consumer Privacy Act and the European Union's General Data Protection Regulation, contextual-based targeting is one way that marketers and publishers like The Washington Post are working around cookie-less targeting.
"With the privacy concerns and a regulatory climate, there's some changes in how advertisers and their partners are looking at targeting," Diez said. "We've always believed that the mindset of a consumer is largely dependent on what's on the page, in an app or in a video."
Peer39 uses semantic targeting, which analyzes text and videos online and on apps. Advertisers can then target ads to people based on what they're looking at. An advertiser selling chocolate chips, for example, can specifically target ads to people who are reading cookie recipes. The approach also helps advertisers concerned about brand safety avoid certain types of content.
Advertisers are worried about losing scale without cookies
A challenge of contextual-based advertising is that it doesn't have as much scale as advertising based on third-party data. Peer39 hopes that its AI-based technology will help solve some of those issues, said White.
Charlie Fiordalis, regional managing partner at ad agency Mediacom, said that regulation like GDPR has signifcantly limited the amount of data that advertisers can access, and clients are increasingly relying on first-party data. He said that in some cases, advertisers initially lost up to 80% of the data they had access to shortly after the European Union's General Data Protection Regulation rolled out last year.
"It pushes us towards a place where we do a lot more contextual alignment," he said.