Dive Brief:
- MediaMath, a programmatic demand side platform (DSP), has filed for Chapter 11 bankruptcy protection after failing to find a possible acquisitor, according to multiple media reports.
- MediaMath was one of the first programmatic DSPs and had reportedly raised more than $600 million since 2007. Once valued at over $1 billion, the company had struggled recently as new executives were brought in to right the ship.
- Viant Technology and Verve Group were reportedly in talks to acquire MediaMath, but neither deal came to fruition, eventually leading to the bankruptcy filing. Access to the platform was reportedly suspended as of June 30.
Dive Insight:
MediaMath’s bankruptcy filing demonstrates the difficulties DSPs can have making money, particularly in a high-volume, low-margin programmatic world that demands differentiation.
Though many advertisers have been shifting their programmatic dollars away from MediaMath’s platform as the company’s troubles slowly became public, MediaMath’s filing indicates that the company owes between $100 million and $500 million to more than 200 creditors. Among those creditors are Google, Magnite, OpenX, Pubmatic and Xandr. Magnite and PubMatic are each owed upward of $10 million, according to MediaPost.
Those creditors, however, will likely take a backseat to outstanding wage and salary obligations — the majority of MediaMath’s employees have lost their jobs — and secured lenders including Goldman Sachs, which had granted MediaMath a $175 million line of credit in 2017. MediaMath last year granted Searchlight Capital a controlling ownership stake for additional funding, according to The Drum.
After bringing in former Sizmek CEO Neil Nguyen to replace the company’s founder and CEO Joe Zawadzki, MediaMath continued to struggle, negotiating with several bidders for a sale, but failing to reach terms on a deal. However, the bankruptcy filing is a bit of a surprise, given that MediaMath recently hired Christine Napoli as its chief financial officer and Manny Puentes as its chief technology officer.
Still, MediaMath is but one company in a growing industry. Shortly after MediaMath’s filing, research firm Technavio reported that the adtech market will increase by more than $760 billion by 2027, as global internet and smartphone penetration continues to increase. In a release, Technavio noted that demand-side platforms should see “significant” growth during that time frame.
Yet, challenges remain: Programmatic buying is still battling industry concerns surrounding data privacy and transparency. While some of the dominant players, like Google and The Trade Desk, are likely too big to fail — and indeed are likely to pick up business in the wake of MediaMath’s bankruptcy — many other smaller firms could face similar issues, according to industry observers.
“The deep truth that came out of this is that a DSP model is tough,” Jeromy Sonne, chief executive at agency Daypart.AI, told The Drum. “It’s a low-margin, high-volume business with lots of churn that is ultimately going to continue to consolidate.”
