Dive Brief:

• Digital Turbine, an on-device mobile platform company, has acquired in-app marketplace provider AdColony from Otello Corporation for an estimated $400 million, according to an announcement. The deal is subject to approval from Otello shareholders and is expected to close in the company's fiscal fourth quarter in March.
• AdColony reaches more than 1.5 billion monthly users globally, per the release, with a focus on categories like gaming. The company has been in the midst of a turnaround plan over the last three years that delivered 15% year-over-year growth in 2020 and "very solid EBITDA margins."
• The news is the latest in a series of ad-tech acquisitions that show companies are moving quickly to snap up ad-tech providers keyed into channels receiving a boost from the pandemic, such as gaming and streaming.

Dive Insight:

With the acquisition, Digital Turbine looks to combine its global distribution capabilities with AdColony's mobile video advertising expertise and client roster, which includes brands like Disney, BMW and Amazon. Austin-based Digital Turbine works with mobile operators and manufacturers on areas like content delivery, user acquisition and operational efficiencies. The goal of the deal is to create a "highly-differentiated and more vertically-integrated solution for the mobile advertising industry," Otello CEO Lars Boilesen said in a press statement.

AdColony is among the ad-tech firms feeling a windfall as the coronavirus pandemic accelerates digital trends that were already gaining traction prior to the health crisis. Mobile gaming, a key segment of its business, has experienced blockbuster gains as homebound consumers seek new outlets for entertainment. The category has seen 28% audience growth since the pandemic's outset, recent Facebook research revealed, and many newcomers are receptive to ad-supported offerings.

"Performance-based spending trends by large, established brand advertisers present material upside opportunities for platforms with unique technology deployable across exclusive access to inventory," said Digital Turbine chief executive Bill Stone in a press statement.

The news marks a significant development for AdColony after the firm introduced a turnaround plan several years ago. In 2017, the company cut more than 20% of its workforce while exiting the ad-serving and mediation business to focus on programmatic ads. A few months later, it lost CEO Will Jassoy and enacted more job cuts. AdColony's struggles at the time were indicative of the difficulties in developing resonant mobile advertising strategies even as the channel boomed in popularity.

But the pandemic has reset the equation for engagement with mobile, and a high interest in gaming is reflected on the publisher side of the business as well. EA, a well-established developer of console games, last month announced it was acquiring mobile games developer and publisher Glu Mobile for $2.4 billion. Glu is known for creating titles like Kim Kardashian: Hollywood.

Other recent AdColony deals include a pact struck last November with Anzu to provide Anzu's in-game advertising solutions for display and video to brands partners in the Asia Pacific region, per MarTech Series.