'We need a fundamental rethink': MediaMath, long seen as an ad tech takeover target, is instead building a war chest to fix a broken industry

REUTERS/Las Vegas Sun/Steve Marcus

A gambler counts out cash while making a proposition bet on Super Bowl XLV at the Las Vegas Hilton in Las Vegas, Nevada January 27, 2011.

• The ad tech company MediaMath has received $225 million in financing from the private equity firm Searchlight Capital Partners.
• The company had been an acquisition candidate following AT&T's purchase of AppNexus.
• MediaMath plans to invest heavily in ad tech infrastructure and artificial intelligence, CEO Joe Zawadzki told Business Insider.

The math is starting to add up for ad tech.

Just a few weeks after AT&T snatched up the New York ad tech company AppNexus for $1.6 billion, another big ad tech name is getting a major cash infusion.

MediaMath, which operates one of the more prominent ad buying platforms in digital media (i.e. a 'demand side platform'), has just announced a whopping $225 million in new financing, led by the private equity firm Searchlight Capital Partners.

CEO Joe Zawadzki said that MediaMath will continue to operate independently following the new funding, as Searchlight is acquiring a minority stake in the firm.

MediaMath - which also helps many big advertisers manage their digital customer data - has been around for over a decade. Over that time it has raised over $500 million.

The company has been mentioned numerous times over the years as an acquisition target. And indeed, it instantly became another buyout candidate following the AppNexus deal.

The new private equity pact would seem to squelch that talk. In fact, Zawadzki said that the company had received interest from potential acquirers over the years. But after assessing the company's strengths and opportunities, his team elected to push forward and "keep building."

Why raise so much cash? Zawadzki told Business Insider that some of the money will be used to buy out some previous investors. But for the most part, MediaMath is thinking big.

Zawadzki said he sees digital advertising finding itself at a crucial crossroads: the technology has never been more powerful, yet people in the industry and consumers are highly dissatisfied with the medium. "There is a tremendous amount of frustration" in the business, he said.

So in his mind it needs a total overhaul.

That means heavy investment in artificial intelligence - something Mediamath has already begun - as well as potential acquisitions. Plus MediaMath plans to work on an industry-wide solution to help companies identify people to target with ads using data in a privacy compliant fashion.

He said that given what has happened in the industry, between GDPR and the Facebook/Cambridge Analytica fallout, ad tech has no choice but to evolve.

"This year, new things need to happen," he said. "Companies are realizing that even if I wasn't prepared to make changes I have to. We need a fundamental rethink."