AdColony cuts 125 jobs, exits ad-serving business

Brief:

AdColony, a mobile video ad company, cut more than 20% of its workforce and exited the ad-serving and mediation business to focus on programmatic ads, which uses software for media buying and ad placements. About 125 people are losing their jobs in addition to the 100 workers who were cut in July, leaving AdColony with a headcount of roughly 400, AdExchanger reported.
AdColony closed most of AdMarvel, a mobile adtech company acquired in 2010, while keeping its ad exchange operation. AdMarvel will operate until May as AdColony migrates publisher partners to its platform.
AdColony CEO Will Kassoy said the firm wants to expand the portion of its programmatic revenue to 50% of total sales from 20% as it opens up its mobile video inventory. Programmatic video in mobile, especially for in-app ads, is in the early stages of development and presents an opportunity for his firm’s future growth, he said.

Insight:

The news points to ongoing consolidation in adtech while suggesting that mobile video programmatic buying could be poised for growth. According to eMarketer earlier this year, more than half of U.S. digital video ad dollars traded via programmatic for the first time in 2016. By 2019, nearly three-quarters of all video ad dollars are expected to go through programmatic. While there are challenges with programmatic around the lack of control brands have over where their ads appear, the AdColony news suggests this could still be an area of opportunity.

AdColony has had to reinvent itself in response to changing market conditions since being founded in 2008 as a mobile ad network. Mobile mediation is in a long-term decline with the shift to programmatic advertising, while ad serving has become more commoditized with some publishers even bringing the service in-house.

AdColony now wants to focus on meeting the demand for mobile programmatic advertising. Its software development kit (SDK) is integrated in many of the top 1,000 apps, according to Metamarkets data cited by AdExchanger. That user base provides a significant ad inventory, including vertical video and proprietary AdColony video formats. The firm’s revenue fell in Q2 from a year earlier but did rise from the prior quarter, and CEO Kassoy said the goal is to generate profits going forward.

Norwegian software company Opera bought AdColongy in 2014 to support its mobile ad arm, Opera Mediaworks. The unit this year was spun off into a separate company that changed its name back to AdColony.