It was a poster child for a new wave of ad tech companies exploding onto the scene with a splashy public offering in 2012. In recent months, it became a cutout target for skeptics and investors taking shots at digital advertising companies' abilities to turn a profit and stick around.
Now, after watching its revenue growth dwindle from triple-digits into negative territory and its share price dwindle from a high of $27.90 right out of the gate to just $1.34 in September of 2015, Millennial Media's watch is over. AOL announced Thursday that it had agreed to acquire Millennial at a 31% premium of $1.75 per share in a deal that will value the company when it closes at about $238 million.
In a press release announcing the sale, AOL claimed it was adding a "leading supply-side platform for app monetization" and "significant mobile brand advertising scale" that would help it better advertise to users across multiple devices and internationally. "As we continue to invest in our platforms and technology, the acquisition of Millennial Media accelerates our competitive mobile offering in ONE by AOL and enhances our current publisher offering with an 'all in' monetization platform for app developers," AOL president Bob Lord said in a statement.
To peel back the jargon, AOL (recently acquired itself by Verizon) is still desperate to reach smartphone users with ads. While industry experts had been skeptical about Millennial's technical product for months and it was still losing money on negative revenue growth, the company claimed to reach more than 700 million users as of June 30, with 65,000 apps operating on its platform. The company also said in its last earnings call that it had hoarded 800 million anonymous user profiles to more valuably advertise to mobile shoppers.
But realistically, Millennial was just cheap, the body of what was once a fast-running race car to be stripped for parts. AOL's taking on Millennial's engineering talent that stuck around and banking on the fact that there's value in those user profiles and customer reach, even if Millennial's product itself has been largely left behind, as evidenced by its inability to continue to grow or flip the switch to make a profit off the customers it did have.
For the rest of the ad tech industry, it's another reminder that the public market that once ate up Millennial's shares is now a brutal one to engage. TubeMogul trades below its 2014 IPO price and Rubicon Project trades below its 2014 first-day high. Rocket Fuel trades at a fraction of both the list price and initial highs of its 2013 IPO, as does Tremor Video. Even Criteo, which went public in October 2013 and improved share value pretty consistently for months after that, has endured a 30% haircut on its share price since mid-July, dropping it close to its first-day price.
And for Millennial Media, the nine-year-old ad tech company that Forbes called "red-hot" as its shares doubled at IPO, the struggle to turn things around is over now. That's up to AOL. At least AOL knows a thing or two about selling when the writing's on the wall.
