Google Acquires Invite Media, First Buy-Out of a DSP

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Google has acquired Invite Media, a New York City-based demand side platform, according to AllThingsD. ClickZ sources confirmed this morning the deal has gone through, and said Google delayed it to protect its AdMob acquisition.

Founded in 2007, Invite was among the first wave of DSPs to enter the marketplace. It competes with players like Turn, MediaMath, and DataXu to allow agencies and advertisers to buy display ad media from ad exchanges and ad networks while plugging in both proprietary and third party data sources.

AllThingsD reported, with some uncertainty, that Invite Media sold for about $70 million. The company is backed by First Round Capital, Genacast Ventures, and strategic angel investors.

Google has been shopping for a DSP since late 2009, and has met with various companies in the space. Sources say its deal with Invite Media was finalized some time ago, but that Google delayed consummating it to avoid jeopardizing its acquisition of AdMob - then under scrutiny by the FTC. The FTC gave its blessing to that deal on May 21, and Google completed it last week.

Google’s presumed goal is to add Invite Media’s tools to its stack of display ad buying tools, which already includes DoubleClick, the Google Content Network, and the Google Ad Exchange.

The risk for Google and Invite Media is that agencies will flee or avoid the platform out of concerns over impartiality - in particular that Google will use Invite Media’s bidding interface to promote its own inventory over that of rival ad networks and exchanges.

Invite Media competitors are already calling attention to media bias issues. For instance, Mike Baker, CEO of DataXu, told ClickZ this morning, "Does it threaten agencies who increasingly are being asked to take the entire the stack? Does this turn the Google Exchange back into the Google content network? It has buyers and sellers and is run by one group that’s maximizing profit in the middle.

According to AllThingsD’s report, Google hopes to address the independence question by running Invite as a standalone unit. At the same time, the company intends to integrate the tools with its Doubleclick for Advertisers suite.

The deal is the first of what will likely be a string of acquisitions of display ad technology companies. Speaking recently at a conference, investment banker Terence Kawaja said vendor consolidation is inevitable.

Kawaja described the space as "overcrowded" and identified nearly 200 companies in 24 categories, including DSPs, agency media platforms (Havas’ adnetik, Publicis’ Vivaki), data exchanges (BlueKai, eXelate), media verification tools (DoubleVerify, Mpire), and data aggregators. He noted such companies have received $2.5 billion in funding going back about four years. However, "this channel has a lousy $8 billion spend," he said.

Anna Maria Virzi contributed.