The ad-tech M&A train keeps rolling. The latest action is digital advertising startup Kargo acquiring StitcherAds for $64 million today. StitcherAds specializes in paid social advertising with a focus on eCommerce, thus broadening Kargo’s product suite and its appeal to online retailers and brands.
Kargo helps marketers buy ads via hundreds of publishers, but it erstwhile hasn’t been available on large social media platforms. So Stitcher Ads helps it scratch that itch with a platform that’s purpose-built for ad creation and distribution in Facebook, Snapchat, TikTok, Pinterest, and a growing list of others.
Shoppable Content
More specifically, StitcherAds uses real-time product feeds and socially-driven consumer data within these social walled gardens. It then generates personalized and dynamic product ads that drive consumers towards transactions. This aligns with the overall trend towards shoppable social content.
But the acquisition more importantly rounds out Kargo’s product suite. This includes StitcherAds’ focus on CPG as an advertiser vertical. With this and other verticals, the idea is to offer a full suite of digital advertising and commerce products, now with more depth in paid social advertising.
In addition to new capability and depth, this acquisition boosts Kargo’s total media spend under management to $550 million. This includes retailers such as Macy’s, Saks Fifth Avenue, Bed Bath & Beyond, Finish Line, and Calvin Klein. Kargo will also boost its headcount from 220 to 350.
As further background on Kargo, it’s profitable and with net revenue expected to exceed $100 million this year according to the Wall Street Journal. Meanwhile, Stitcher Ads works on a hybrid service model, offering fully managed services and self-serve — hitting several demand levels and budgetary ranges.
Full Circle
Stepping back and coming full circle, this is just the latest M&A action in a period of consolidation in ad tech. Part of that is due to larger privacy reform that directly impacts the ad tech sector. And some of it is Covid-driven, as eCommerce inflections lead to opportunistic growth and collaboration opportunities.
The latter is certainly the case with this acquisition, given StitcherAds focus on eCommerce and shoppable ad units. We’ll continue to see that as a point of value. Whoever can compress the shopping funnel and reduce friction for buying products in social feeds will be well-positioned for the near term.
“The pandemic has accelerated all of the trends where consumers now feel much more comfortable shopping and buying online and picking up in-store,” Kargo CEO and founder Harry Kargman told the Wall Street Journal.
