Twitter + MoPub: Twitter just bought the digital ad exchange it wanted

Twitter just bought the digital ad exchange it has been planning to launch since at least May of this year. The news-of-the-moment social network acquired MoPub for a purchase price of $350 million in stock, according to a report by TechCrunch.

Twitter announced the purchase on its blog:

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We’re excited to announce that we’ve agreed to acquire MoPub, a mobile-focused advertising exchange. MoPub’s technology lets mobile application publishers manage their inventory and optimize multiple sources of advertising — direct ads, house ads, ad network, and real-time bidding through the MoPub Marketplace — in a single product. You can learn more about them on their site, along with their blog post about this announcement.

Digital ad exchanges provide a marketplace for ad buyers and ad space sellers to meet and transact business. Mopub offers a real-time exchange in which brands offer automated bids for inventory that becomes available, at the very moment it begins to exist — much like Google Adwords. Essentially, an ad space gets created when you view a new page in an app and is sold and delivered to you with the rest of the app, all in milliseconds.

That’s pretty much what Twitter is planning to do with MoPub’s technology, along with using it to develope more native ad capabilities within Twitter’s service, particularly on mobile.

We also plan to use MoPub’s technology to build real-time bidding into the Twitter ads platform so our advertisers can more easily automate and scale their buys. We’ll maintain the same high quality standards that define our platform today. Our approach is to show an ad when we think it will be useful or interesting to a user, and that isn’t changing.

In MoPub’s announcement, CEO Jim Payne emphasized the similarities between Twitter and MobPub:

Three years ago, Bryan, Nafis and I launched MoPub with a mission: to enable great content by powering advertising for the world’s mobile publishers. We had a firm belief that programmatic buying and a strong commitment to serve the publisher would enable the development of a new ads economy in mobile. Since that time, as our team has grown to nearly one hundred employees worldwide, our platform has grown to serve billions of mobile ads every month around the world on behalf of our publishers.

Today, I am excited to announce that MoPub has agreed to be acquired by Twitter. Like MoPub, Twitter has been “mobile first” since their inception, which makes our two companies a natural match.

Real-time bidding for ad slots is increasingly the future of advertising, and MoPub is one of the more successful players in the industry.

“Advertisers are finally getting it … they’re getting what real-time bidding is,” Mopub’s director of marketing Elain Szu told me late in 2012. “The direction is up and to the right.”

Up and to the right is great for MobPub, which has a $100 million annual revenue run rate as of May this year. During VentureBeat’s research of the mobile advertising industry, based on hundreds of respondents from real users, we found advertisers rated MoPub as one of the top-ten mobile advertising products in terms of traction. However, it’s also true that MoPub remained on the cusp of that list, and in our report we said we weren’t completely confident about their on-going momentum, especially given the pressures toward consolidation. You can get a copy of our reports for free, in return filling out a survey).

The $350 million buy price also allows MoPub founders Bryan Atwood, Nafis Jamal, and Jim Payne to cash in twice: once now, from Twitter, and once again from Twitter’s expected IPO in early 2014.

Now Twitter now has almost all the pieces of the digital advertising pie:

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• a massive traffic-generating web/mobile media property
• automated ad-buying via API
• self-service buying of Promoted Tweets and Promoted Accounts
• massive ad deals with global agencies such as Starcom MediVest
• demographic ad-targeting tools
• keyword targeting capabilities
• geo-targeting ad capabilities that some partners claim can outperform search ads
• and even TV ad targeting tools

Plus, of course, the glue to tie it all together: an automated, real-time, digital ad exchange.

According to MoPub CEO Payne, nothing will change at the mobile ad exchange, and the company will continue to serve a diverse group of clients — not just Twitter:

It’s important to underscore that our commitment to you, the publisher, will not change. In fact, it will be strengthened. Twitter will invest in our core business and we will continue to build the tools and technology you need to better run your mobile advertising business.

In addition to investing in new capabilities for our publisher platform, we believe there are opportunities to bring better native advertising to the mobile ecosystem. With the support of the team and resources of Twitter, we’ll be able to move even more quickly towards the realization of our original vision.

We can’t wait to “join the flock” and continue to build incredible products for publishers. It’s been an amazing ride – and it’s just getting started. My deepest thanks to the MoPub team and everyone who has helped us along the way.