The CEO of ad tech firm TubeMogul explains why he sold his company to Adobe for $540 million and what happens now

Brett wilsonTubeMogulBrett Wilson, TubeMogul cofounder and CEO.

When Business Insider chats on the phone with TubeMogul CEO Brett Wilson on Tuesday, he has just jumped off the stage after addressing his staff on his and their first official days as Adobe employees.

Adobe announced in November it was acquiring the video demand-side-platform (DSP) for $540 million, net of debt and cash in November. The move surprised many people in the ad tech industry — TubeMogul was a public company and it wasn’t one of the firms that usually gets mentioned in M&A ad tech rumours.

Wilson spoke to Business Insider about how the deal came about, what TubeMogul is going to do for Adobe, and what the acquisition means for the wider ad tech market.

This interview has been lightly edited for length and clarity.

Lara O’Reilly: Your acquisition surprised a lot of people in the ad tech industry — it wasn’t one of the rumours that had been doing the rounds. Talk me through the timeline of the acquisition.

Brett Wilson: We have always had strategic conversations and I think it’s the job of a CEO to understand what your options are.

We found that being a small-cap public ad tech company was challenging and we had many, many quarters in a row when we were beating and raising only to see our stock stay flat or go down. Sometimes that was because of concerns that had nothing to do with us.

We always felt very good about the trajectory of the business, but we were concerned about our ability to be a good stock.

TubemogulMarkets InsiderTubeMogul’s stock performance.

We started to have some conversations with companies, on an exploratory basis, midway through last year. And again, there wasn’t any urgency to the process because the company was doing well: we were growing, hitting goals, winning in market

We found there was a lot of interest, and a lot of interest around ad tech companies that are actually software companies, not managed service companies. There was also a lot of focus on our interest in video because video is increasingly strategic to to a set of internet companies, and publishers, and ad tech companies.

We have had a partnership with Adobe for a long time. We have been integrated with their DMP [data management platform], Audience Manager, and part of our value proposition to our clients was that we are independent, we don’t own media, we don’t have any incentives to shift spend from one place to the other — we thought that was important. If you want to use ad buying software, you want the results to be in your best interest, not that of a software company

As we looked for suitors, it was important for us to to look for companies that are independent, agnostic, and software-focused. Adobe checked those boxes. For Adobe we have helped complete their Marketing Cloud solution, which is incredibly comprehensive as I learn more about it.

O’Reilly: What is going to be your new role at Adobe?

Brad rencher adobeAdobeBrad Rencher, Adobe executive vice president and general manager of digital marketing.

Wilson: I will lead Adobe’s advertising business [reporting into Adobe’s executive vice president and general manager of digital marketing Brad Rencher].

O’Reilly: What does that consist of?

Wilson: It will consist of TubeMogul and Adobe Media Optimizer [which has a] search offering and some social and display offerings.

O’Reilly: Do you foresee Adobe making more ad tech acquisitions?

Wilson: You know, I think Adobe’s executive team are constantly looking at any opportunities to further the mission. We are really trying to build software that helps advertisers power their experiences, from rendering great content on their websites, to showing the right video ad, I think we will be on the lookout for areas to build or buy.

O’Reilly: Some people think that the Adobe/TubeMogul deal will kick-start other marketing cloud/CRM providers into buying up ad tech companies. Do you think that will be the case?

Wilson: It’s hard to say what other companies will do, but I do think you take the Adobe Marketing Cloud — which for many advertisers is really comprehensive because it powers everything from creative strategy, website content, measuring ROI and sales, now with a DSP — you end up with the first end-to-end advertising software stack.

We believe advertisers think the era of best of breed platforms will go away. [Advertisers] want a single software stack.

O’Reilly: What’s your take on the “Methbot” ad fraud scam [that supposedly cost advertisers, collectively, $5 million in wasted spend a day — although many big ad tech firms have now come out publicly and said it affected very little of their inventory]?

MethbotWhite OpsThe Methbot operation.

Wilson: There were ad-hoc reports after the fact that different ad companies didn’t have most exposure.

Clearly, someone obviously had some exposure. It was a really massive bot, believed to be responsible for $1 billion in [wasted] ad spend [over a period of time].

Ad fraud for most companies is not really a focus. It’s a focus after the fact, after there’s a scathing article. Then everyone goes back to business.

What we did a year ago, we integrated [anti-ad fraud technology] WhiteOps into all our reporting. We pay for it, we share those reports with advertisers, and we proactively give them their money back for any fraudulent activity that WhiteOps reports. We have literally given back more than $500,000 over last year

We make fraud something that advertisers don’t have to worry about whatsoever and we are proactive about it.

The onus shouldn’t have to be on advertisers, it should be on ad tech companies and publishers. I’d like to see more of the industry be truly accountable by putting their money where their mouth is, not just reporting after the fact.

We bake it in, we pay for it, and we proactively give their money back. It’s a perception that fraud is just a programmatic thing, but really any time you buy digital media, you can have fraud. Lots of publishers buy traffic, so we give advertisers protection regardless of if they buy on ESPN [direct] or RTB [real-time bidding] inventory.

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