Market Insight

Singtel continues to invest into ad tech by acquiring Turn

February 24, 2017

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Amobee, the advertising technology arm of Singapore’s telco giant Singtel, is acquiring Turn for a reported $310m. Turn is a Demand Side Platform (DSP) and Data Management Platform (DMP) with 15 offices in Europe, APAC and the Americas. The company is headquartered in California. Since its launch in 2006 Turn has raised $160m in funding with half of it secured in 2014.

Amobee itself was an early Singtel acquisition dating back to 2012, fetching a sale price of $321m. 

Our analysis

Originally a DMP, Turn has diversified its advertising operations to span across many sub-sectors of the ad tech ecosystem. It incorporates DSP and DMP platforms and serving ads across display, video, mobile and TV media. This is a particularly attractive feature of Turn from the investor’s point of view, as it gives a single point of access to the hugely fragmented ad tech ecosystem that has boomed between publishers and advertisers over the last years.

Individually, Turn’s two business elements make sense for Singtel: Firstly, the DSP means that Singtel will significantly expand its reach to the advertising market, in the business of executing ad campaigns aided by the relatively large Turn salesforce. Secondly, the DMP side complements the ad tech offering with marketing audience metrics and centralising marketing data to its platform. Singtel first party data will be a natural fit to the marketing data suite, giving the mobile operator the opportunity to monetise its plethora of first party user data across mobile, TV and broadband advertising markets.

The telco sector is actively building tech stacks to compete in the ad markets against the Google-Facebook duopoly which has manifested in a series of ad tech acquisitions (see table). By comparison and to highlight the noted acquisition trends by telcos into the ad tech space; Telenor made a similar investment; to capitalise on its first party data it acquired cross-devise matching platform TAPAD in 2016 for $360m.

Turn actually partners with TAPAD to provide cross-device matching; however, from the marketing operations point of view it also has the advantage that it can couple this feature with the execution tools in the DSP product. The advertising campaigns have evolved to a holistic execution across both devices and media- to follow audiences as they move across devices (desktop-mobile-TV) and content. As a result, the incorporation of tech capabilities under one platform has become a differentiator within the ad tech sector.

The scale Turn has achieved over the last 11 years, and also the funding it has raised has not been on par with its contemporaries. For example, Rocket Fuel a programmatic DSP went public in 2014, as they have raised double the capital of Turn. As this decisive moment to launch an IPO did not materialise for Turn, from the business growth perspective it is natural to seek to expand its operations to fast growing markets. Singtel fast growing APAC territories will be an opportunity to achieve just that. In addition Turn will gain access to social platforms on mobile an area Amobee has been very active in growing its ad expertise serving telcos and advertisers.

Singtel has used its Amobee acquisition to grow its role in the ad tech space; in 2014, Amobee acquired ad tech start-ups Adconion and Kontera for a combined $235m to grow its mobile expertise and expand its client footprint. Singtel, which reported more than 640m subscribers in its traditional operator business at the end of 2016, is one of the most innovative and experienced telcos when it comes to making digital investments and acquisitions. Singtel and its Innov8 investment arm have made over 35 investments and acquisitions since 2011, most of which have been related to advertising technology, video and analytics tools.  

Singtel’s Digital Life revenue category, of which Amobee contributes the vast majority of revenues, reported revenue growth of 24% in Q4 2016 to reach SGD 167m, up from SGD 135m in 2015. Amobee’s revenues were up 21% to reach SGD 160m over the same period. Singtel’s other digital services include online subscription video service Hooq. Digital revenues may be growing rapidly, but the category still represents less than 5% of the group’s total revenue, and both Amobee and the other digital services reported negative EBITDA in Q4 (though Amobee’s position is improving), highlighting that these remain long term bets for the company.

The ad tech world rapidly evolves from DMP to programmatic platforms and newly introduced AI audience buying. The “old guard” of ad tech start-ups will need to catch up with the new technology developments and offering else they run the risk of becoming obsolete. IHS Markit anticipates that the M&A activity in the sector will see further deals in the near future and telcos will play a key role in this. 

Global Singapore
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