European Ad Network Adds Contextual Technology

Crystal Reference Systems, a contextual targeting technology provider, has been acquired by European marketing services provider Ad Pepper Media in a cash and stock deal worth up to $3.5 million (£ 2 million).

Crystal Reference Systems is the parent of both Crystal Reference, which provides academic reference material to schools and media outlets, and Crystal Semantics, which develops Textonomy, an algorithm to enable contextual targeting of ads by applying linguistic tools to the content.

“We envisage that Ad Pepper’s infrastructure, resources and global positioning will enable us to leverage the full power of our product solutions and will help us to roll out new services and business models faster,” said David Crystal, Crystal Reference Systems’ chairman.

Although Crystal Reference Systems in November had agreed to sell a controlling stake in the company to Think Partnership, that deal never materialized. Crystal Reference and Think Partnership “failed to agree upon mutually acceptable definitive agreements,” according to Think’s CEO Gerard M. Jacobs.

“Our acquisition program is disciplined. We were unable to reach agreement with Crystal Reference on a definitive acquisition agreement, including representations and warranties regarding Crystal Reference and its business which we and our London legal counsel believed were necessary to protect Think Partnership’s legitimate interests,” Jacobs said in a statement.

Holyhead, U.K.-based Crystal Reference Systems was founded in 2001 by linguistics expert Crystal, who leads research and development initiatives, and Ian Saunders, managing director, who is responsible for the business side. Both Crystal and Saunders will remain with the company, which becomes a wholly owned subsidiary of Ad Pepper Media.

The Netherlands- and Germany-based Ad Pepper plans to immediately implement Crystal Semantics’ Textonomy solution across its Webstats4u global advertising network, which reaches over 1,000,000 Web sites worldwide.

According to Crystal, Textonomy’s technology goes beyond statistical algorithms to incorporate linguistic tools to recognize semantic relationships between words and the context in which they occur, leading to more relevant results. The technology is patented in the U.S. and the U.K.

“This acquisition dramatically enhances our existing product and service set up to our advertisers and Web site partners. In addition, it adds an attractive new line of business for Ad Pepper with innovative search and content offerings,” Ulrich Schmidt, CEO of Ad Pepper Media, said in a statement.

As for Think Partnership, according to Scott Mitchell, Think’s president, the company will continue to look to buy or build contextual targeting technology to apply to its ad network, though it is not a top priority.

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