Telenor to acquire US marketing technology firm Tapad

Norwegian telecom services major Telenor Group on Friday announced the signing of an agreement to acquire about 95 per cent of Tapad Inc, a leading marketing technology firm in the United States, for around $360 million.

The acquisition, on a debt and cash-free 100 per cent basis, would enable Telenor to take a position within the rapidly growing market for advertising technology, and secures important competence within digital marketing and analytics, the company stated in a release.

Tapad, a New York-based startup, was established in 2010 by Norwegian entrepreneur Are Traasdahl, the company's chief executive. The company delivers unified cross-device marketing technology solutions that give publishers, marketers and technology providers a holistic view of consumers across devices and screens, including smartphones, tablets, home computers and smart TVs.

Traasdahl and his Norwegian co-founder, Dag Liodden, have together retained a 5-per cent stake in Tapad.

"With the acquisition of Tapad, Telenor Group is taking a position within the rapidly growing market for advertising technology, and securing important competence within digital marketing and analytics. I believe significant value can be created from applying marketing technology to improve the digital capabilities of our core telecom business. This will improve our understanding of customer behaviour, and support building a platform for other business areas,'' says Sigve Brekke, chief executive of Telenor Group.

Tapad is a market leader in the US, providing an accurate and unified approach to connecting with consumers across screens. Tapad's innovative device management solution, The Tapad Device Graph, assimilates billions of data points from different devices and platforms, and helps customers recognise, measure and monetise their audiences across all of their internet connected devices, while at the same time respecting data privacy.

"We are thrilled to join the Telenor family. With more than 200 million mobile subscribers in 13 markets, Telenor is one of the largest and most successful telecom companies globally. I am excited by what this acquisition means for our employees, our partners and our continued growth. This will accelerate our vision to become the worlds' leading provider of unified digital marketing solutions," says Are Traasdahl, CEO and founder of Tapad.

Within its media business, Tapad currently has more than 160 of the top US brands among its customers and benefits from over 50 data technology licensing partnerships. In 2015, the company is expected to report revenues of $57 million, growing at 70 per cent compared to 2014, and an EBITDA loss of $12 million. In 2016, revenues are estimated to increase to around $90 million.

Fornebu, Norway-based Telenor expects Tapad to make a profit and break-even in 2017. Tapad has approximately 160 employees, with offices in 13 key cities in the US and Europe.

The digital advertising market is sizeable and fast-growing, with mobile advertising driving the growth. The total global market amounted to approximately $160 billion in 2015. The market has seen a rapid development in recent years with the rise of algorithmic and automated buying at the expense of traditional advertising networks.

The US digital advertising market is the most developed in terms of market size and competence and Telenor expects to gain from solid growth opportunities in both Tapad's established markets and within Telenor's footprint in emerging markets.

Telenor has previously taken positions within new digital business areas within the Internet of Things, Online Classifieds and Financial Services. The acquisition of Tapad will give Telenor a solid position within advertising and marketing technology and strengthen Telenor's data analytics capabilities significantly.

Telenor is acquiring majority stake from holders such as Are Traasdahl and his investment company Spring Capital (in total 46.5 per cent), FirstMark Capital, Firsthand Technology, Avalon Ventures, WPP and Metamorphic Ventures.

Tapad will be operated as a stand-alone company. Traasdahl, the current CEO of Tapad, and Dag Liodden, co-founder and CTO, will maintain their positions.

Telenor said the transaction is expected in first quarter of 2016 subject to regulatory approvals.