Cheetah Mobile, a software company based out of China and best known for products like the Clean Master security and storage optimizer for Android devices, has made an acquisition to move deeper into the world of ad tech. Today, the company announced that it will buy MobPartner in a $58 million cash-and-stock deal.
Upon close of the deal later this year, MobPartner will become a subsidiary of Cheetah. CEO Djamel Agaoua will stay on to head up MobPartner and will take on the additional role of Senior Vice President at Cheetah Mobile.
MobParter is a specialist in areas like performance-based advertising and other mobile marketing services. It says it is active in 200 countries and with more than 10,000 publishers worldwide, reaching over 200 million mobile users and over 18 billion impressions per month.
Founded in 2007 in Paris and raising a mere $3.5 million since then, it is one of several notable ad tech startups that have been founded and grown in France, and also one of a number of exits. Other notable M&A plays include Criteo (which went public last year and has been making acquisitions of its own), MakeMeReach (acquired by Perion), and SocialMoov (acquired by Marin).
Cheetah itself is a spinoff of Kingsoft and started to trade on the NYSE in May 2014 and is currently valued at $2.64 billion. It says that it has 340 million people using its products monthly. Despite the valuation, customer base size and public listing, however, the company has kept a somewhat low profile in the U.S., although it’s been making an effort to reverse that more recently.
For Cheetah, the idea behind the acquisition of MobPartner is that it gives the company an obvious route for targeting more advertisers, publishers and developers, in addition to its existing products that are aimed more directly at the consumer market.
As with other mobile optimising businesses like Onavo (which Facebook acquired), products like Clean Master, CM Browser (a light internet browser) and Battery Doctor (a smartphone battery life extending app for iOS and Android) give Cheetah a large trove of data about mobile usage.
Matching this up with MobPartner’s business will give the latter product far greater reach and potential. While Cheetah has already been trying to do this, MobPartner will provide a more effective front end suite of services to utilize this data.
“While we have… made significant progress in building a global mobile advertising platform, we are only getting started,” said Sheng Fu, Chief Executive Officer of Cheetah Mobile, in a statement. “The acquisition of MobPartner will further enhance Cheetah Mobile’s expertise in mobile advertising and together we will be building one of the world’s leading mobile advertising platforms.”
Notably, this is also the approach that another mobile software company, Opera, has taken with its own suite of mobile optimization tools (including browsers that compress data) alongside its own advertising products (which are grouped into the company’s Mediaworks division). It too has been investing in building out these mobile ad products, with acquisitions of its own including the purchase of AdColony last year for up to $350 million. We’ve been hearing of yet more acquisitions afoot in the mobile ad space as well.
For MobPartner, this is also an inevitable step in the bigger consolidation that we are seeing in the mobile ad industry.
While the company boasted 200 million unique users, the margins on mobile ads remain small. On top of this, compare that number to the 1 billion recently touted by InMobi or the size of Google and you can see where outsized scale, or a network effect based on other kinds of products (like mobile optimization) are essential to a mobile ad business surviving longer term.
This seems to also be the rationale hinted at by MobPartner.
“We … share a common vision on how to maximize mobile advertising return on investment around the world and therefore this deal became a natural evolution and extension of our business,” Agaoua said in a statement. “Cheetah Mobile enables us to strategically accelerate our growth by increasing both our traffic and product offerings.”