On the heels of AOL snapping up Millennial Media last week comes another mobile advertising consolidation play. IronSource, a specialist in mobile app distribution and promotion services, has merged with Supersonic, a mobile ad company specialising in in-game and in-app ads. The deal will create one large mobile ad player, covering 1 billion monthly users and expected to generate $450 million in sales in 2015.
A deal between the two has been in the works for a while — earlier this summer reports emerged that IronSource would be outright buying Supersonic for a price estimated to be anywhere from $150 million to $300 million. (An acquisition rather than a merger was possibly fuelled also by the fact that IronSource raised $105 million in February 2015, specifically to make acquisitions ahead of an IPO.)
In the event, Omer Kaplan — the deputy-CEO and co-founder of IronSource — tells TechCrunch that the deal was in fact a merger, and that those price estimates were not accurate anyway (and the value of the deal is not being disclosed).
“It’s definitely a merger because we’re two companies joining forces to become the largest independent mobile distribution and monetization company,” he said. “This is the first step in fulfilling that vision.” Tomer Bar Zeev, CEO of IronSource, will be the overall CEO of the merged company.
Gil Shoham, CEO of Supersonic, adds that all of Supersonic’s staff, including key execs and founders, are all staying on as part of the deal, and Supersonic’s investors are also staying in. Together, the merged company’s backers will include Access Industries, JP Morgan, Morgan Stanley, 83North (formerly Greylock Israel), and more.
The bigger organization will have a total of 800 employees with half dedicated to R&D.
Prior to the merger, IronSource said that it had 450 million unique mobile users a month, with 6 million targeted installs a day, while Supersonic had 550 million users and 250,000 daily installs.
While both companies plan to keep their current customers on board after the merger, there will also be some integration ahead: the two plan to offer a unified SDK as part of a full-stack solution, says Kaplan. It will also likely be making some more M&A plays going ahead to add more into the mix, specifically around video, he says.
Combined advertising options will include mobile video, offerwall, interstitial and display, as well as mediation support.
Why the decision to merge rather than simply partner? Part of it is a cultural fit. “We go back years and know each other well and have very similar DNA and culture and share the same vision,” Shoham says, with both companies originally founded in Israel as part of the country’s bigger ad-tech ecosystem. “We just know we can become the same company.” IronSource has a staff-led “IronBand”, pictured here. It’s not clear if Supersonic will be joining in the music making.
Kaplan also says that larger, full-service advertising offerings are what clients are demanding today as a reaction to a very fragmented market. “The trend especially among big companies and brands is that they are looking to work with a limited number of advertising houses to get what they need,” he says. “We were seeing that at both companies from our clients. Right now Supersonic is strongest on video, and IronSource is the best at monetizing on mobile.”
Looking ahead, while there may be more inorganic growth (read: acquisitions) for IronSource, it won’t come with fundraising, at least for now. “We’re not actively looking to raise money, and when we do it will be for strategic investments,” Kaplan says. IronSource has been profitable “from day one” and a lot of that has been reinvested back into the business, he adds.