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Snap Snags Adtech Startup To Assuage Advertisers

Morning Report: Snap, the parent company of Snapchat, reportedly bought adtech play Metamarkets. TechCrunch reports that the deal will settle for less than $100 million. What’s Snap doing?

According to TechCrunch’s Ingrid Lunden, Snap has acquired advertising-focused startup Metamarkets, a company that works in the “buying and selling programmatic media” space, according to its Crunchbase profile.

The smaller company was founded in 2010, headquartered in San Francisco, and had raised just under $58 million, which includes a debt round.

The move by Snap to acquire the startup is notable as it may provide the public company more sturdy advertising technology infrastructure, which ad buyers on Snapchat have wanted for some time. Indeed, Snap’s ad performance details have been the subject of some complaints.

Observe the following pair of quotes from a Reuters piece discussing Snap before its IPO. First:

As Snap Inc looks to gobble up a larger share of the $82 billion digital U.S. ad market, the owner of the ephemeral messaging app popular with millennials could find itself facing more demands from advertisers for reliable metrics.

And second:

While major advertisers have been eager to experiment with Snap, the measurement issues loom large in persuading advertisers to make big, long-term commitments. The digital ad industry has struggled for years with how to measure whether an ad has actually been seen, and what counts as a “view” when many users linger on a video for only a few seconds.

In this context, the Metamarkets acquisition makes quite a lot of sense. Snap is heavily reliant on ad incomes to fuel its growth, and, accordingly, making advertisers happy is of existential importance for the social media company. And if its advertisers felt that Snap’s ad platform didn’t deliver good reporting tools, why not plug that with an acquisition?

And that is just what Snap did. Lunden, take us home:

If Snap can provide better tools to marketers, it could lure them to spend more investment on Snapchat. And potentially Metamarkets provides more: it could represent an opportunity to Snap to present itself as an analytics dashboard across a number of other properties, not just its own.

All that for less than $100 million at a company whose equity trades for a trailing price-to-sales ratio of more than 28? That’s like spending pennies that get accepted as if they were dollars.

From the Crunchbase Daily:

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