DoubleVerify to acquire ad tech firm Scibids

DoubleVerify has agreed to acquire Paris-based ad tech firm Scibids, bolstering its ability to help brands run effective ad campaigns in the right contextual environments, which is crucial amid the depreciation of cookies.

Why it matters: The deal between the ad verification company and the ad optimization firm is the latest pickup in M&A for the ad tech sector.

Of note: LUMA Partners, which advised Scibids, said in its Q2 2023 report that the past quarter was its third straight quarter of increased deal activity.

Details: DoubleVerify reported the news during its second-quarter earnings report Monday and said it will acquire Scibids in a cash and stock deal valued at $125 million, which could be increased based on performance.

• Scibids' 70-person team is expected to join DoubleVerify, which has about 900 employees.
• DoubleVerify said it expects the deal to close in the third quarter.
• Scibids raised $7.2 million in funding from BlackSheep Ventures and Iris Capital, per PitchBook.

Context: The acquisition comes in the wake of a successful partnership between the two firms, called DV Algorithmic Optimizer. CEO Mark Zagorski said Monday that DoubleVerify reported a 45% reduction in media CPMs, a 63% increase in attention and a 95% increase in impressions in initial tests.

• DoubleVerify's stock is up 86% from a year ago. That's a stark turnaround from the 45% stock price drop it faced from July 2021 to July 2022.
• The company reported Monday its revenue was up 22% from a year ago to $133.7 million. It estimated full-year revenue would be up about 24% from the prior year. That boost comes as it signs more partnerships and expands others including Instagram Reels, YouTube Shorts and Uber.
• Its stock was down about 8% in after-market trading, which could have been due to a slight EPS miss, some of which can be attributed to MediaMath's bankruptcy.

The big picture: The ad market has begun to show signs of improvement after the slowdown, Sara Fischer writes. Meta, for example, reported strong guidance for its ad growth next quarter during its earnings last week.

• Companies like DoubleVerify benefit from a resurgence in ad spending. But the platform is also more resilient than some other ad tech firms since they do not make money from the flow of ad dollars but rather the number of ad impressions it measures.
• "Even in economic downturns, people don't watch less connected television, they don't use their phones less or use their computers less, so it means ad impressions still run," Zagorski told Axios last year.

What we're watching: MediaMath's bankruptcy will likely impact other ad tech firms' earnings to be released later this month. The company owed $12.6 million to Magnite and $10.5 million to Pubmatic, according to its bankruptcy filing.