Aol Buys Marketing Analytics Company Convertro For $101M (Memo)

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A day before its quarterly results, AOL, owner of TechCrunch, has announced another acquisition to beef up its ad tech operations. It is buying Convertro, a marketing optimization platform, for $101 million – $89 million in cash, $2 million in converted stock awards and a $10 million earn-out over 17 months.

AOL says that it will be integrating Convertro’s service — which lets a marketer look across different ad channels, formats, segments and so on to figure out things like which ads influenced which kinds of users and when – into AOL Platforms, covering services like Adap.tv, AdLearn Open Platform (AOP) and ONE, the company’s recently-announced programmatic effort.

The deal is an interesting one in that it points to how AOL has been gradually shifting its business not just to one based on ad revenues, but on making those revenues more high-margin and more intelligent — no surprise, since competing against the likes of Google or Facebook as a volume play with lower margins is a losing game.

Convertro, based in Santa Monica, had raised some $5 million from Bessemer Venture Partners, DAG Ventures and MHS Capital and Founders Collective.

To date, this is AOL’s 62nd acquisition, with the latest (before this one) being content personalization app Gravity for just under $91 million; and Adap.tv for $405 million.

The full memo from Tim Armstrong, AOL’s CEO, is below:

We are continuing our momentum in programmatic advertising with another strategic acquisition. Today, we’re announcing that Convertro, a leading provider of multi-touch attribution modeling technology for brands and agencies, will be joining AOL Platforms.

 In short, multi-touch attribution modeling is all about helping marketers and agencies maximize return on their advertising spend across online and offline media channels with granular insights into each channel, format, ad creative and audience segment. For example, a fashion brand can better understand which part(s) of their marketing campaign (i.e., a TV spot, an online video ad, a catalogue) influenced a customer’s purchase and to what extent, allowing them to adjust their ad spend accordingly and in real-time.

Convertro gives AOL’s Adap.tv, AdLearn Open Platform (AOP) and ONE By AOL customers the ability to manage the consumer journey across the entire purchase funnel and across all channels, driving economic efficiencies and media effectiveness.

Shortly after we introduced our plans for ONE by AOL in March, Jefferies Equity Research analyzed the ad platform space and ranked AOL and Google at the top of the heap – far outpacing the rest of the industry in capability and service.  Earlier today Google announced its acquisition of Adometry – a primary competitor to Convertro – in yet another affirmation of our position as one of two primary platform competitors.   Our acquisition, combined with our commitment to fostering an open, global ecosystem, will let us offer an enterprise solution that is not only comparable, but a stronger option for brands, agencies and publishers around the globe.

Convertro CEO Jeff Zwelling and his team will report into Toby Gabriner, CEO of Adap.tv and ONE by AOL. Convertro’s engineering organization will report to Seth Demsey, CTO of AOL Platforms.

Please join me in welcoming the Convertro team to AOL!

Update: TechCrunch’s Anthony Ha spoke to Demsey (the Aol Platforms CTO mentioned in the memo) to learn more about the deal. He said that after looking at the market, he was particularly impressed by Convertro’s ability to attribute purchases to the right ad, particularly across channels. (We wrote about Convertro’s support for TV ads a couple of years ago.)

Demsey added that Convertro is tackling “a classic machine learning, big data problem” by using this attribution data to help advertisers find “the best path” in allocating their ad spending.

Aol was partnering with the company even before the acquisition, Demsey said, but “by bringing the data platforms closer,” it can use the technology with fewer delays and more automation. At the same time, Aol’s ad platforms will still be open to other attribution technologies as well.

“This is a key piece for us taking our programmatic ad platform really to the next level,” he added.