The in-app header bidding space is gathering momentum – but not fast enough for AppLovin.
The mobile ad network has acquired MAX, a startup that came out of beta just over four months ago with a solution that helps app publishers get a fair shake on the open exchange, the company announced Wednesday.
“There are a lot of people out there talking about wanting to do in-app header bidding,” AppLovin CEO and co-founder Adam Foroughi told AdExchanger. “But we didn’t want to just wait for it to happen.”
MAX, which raised $3.5 million in seed funding at the end of last year, was founded in late 2017 by mobile luminary Jim Payne, the man behind mobile exchange MoPub. Payne and his MoPub co-founders sold that company to Twitter in 2013 for $350 million.
AppLovin declined to share how much it’s paying for eight-person startup MAX. The figure is no doubt significantly less than the price MoPub commanded. The transaction structure is a mixture of cash and stock.
AppLovin is on track to reach a $1 billion run rate next year and just closed a $400 million investment from private equity firm KKR in mid-July. In November, AppLovin took $841 million in financing from Chinese PE firm Orient Hontai. AppLovin’s valuation is now around $2 billion.
But MAX wasn’t actively looking for a buyer when AppLovin came knocking. The deal was opportunistic, said Foroughi, who’s known Payne since his MoPub days.
The deal isn’t an acqui-hire, though, Foroughi said. AppLovin was equally interested in MAX’s talent, tech and customer relationships, he said.
MAX employees, most of which are MoPub vets, will work out of AppLovin’s Palo Alto headquarters. MAX CEO Dan Sack will transition to VP of platform at AppLovin. And Payne will stay on as a strategic adviser to help oversee the process of combining the MAX solution – to be renamed MAX by AppLovin – into AppLovin’s SDK.
“There are various different platforms you can use to manage inventory today, but we wanted to create something that’s fully transparent,” Payne said. “Combining the two companies accelerates the process of leveling the playing field for access to inventory from as many publishers as we can.”
Once the back-end integration is completed later this year, publishers with the AppLovin SDK will be able to flip a switch and automatically run unified auctions.
The main rationale behind the acquisition of MAX is speed to market.
Mediation is a “tough business and innovation is just slow there,” Foroughi said. Ad networks must spend a lot of time wooing publishers for a choice spot in the waterfall, while publishers inevitably end up missing out on monetization opportunities for their inventory if there’s an eager buyer that happens to be at the bottom.
MAX, whose name stands for mobile ad exchange, has its own SDK that publishers can use to access dynamic demand. But AppLovin’s existing SDK footprint brings exponential scale without developers having to integrate yet another SDK.
“You can drop a couple of lines of code onto a website to swap solutions in and out, but in the mobile in-app space, you still have the SDK problem,” Foroughi said. “What can accelerate the supply side.”