Marketing Technology Market Update – Search Engine Marketing

This guest post is written by Venture Scanner’s advisor, marketing executive Alex Ortiz.

The Marketing Technology sector continues to grow. In this update we are highlighting 39 companies that serve paid-search marketers. This group has raised at least $338 Million to date (some companies have not disclosed investment amounts). To see the full list of 916 companies in the Marketing Technology sector, contact us using the form on www.venturescanner.com.

Search Engine Marketing (SEM) Solutions

Tools for search typically are grouped into at least two categories: Search Engine Marketing (SEM) or Paid-Search Companies, and Search Engine Optimization (SEO) Companies. Companies turn to SEM solutions to efficiently scale their paid-search programs. With these tools, advertisers can manage campaigns that consist of millions of keywords. These solutions provide four principal capabilities: keyword generation, bid optimization, ad copy creation and optimization, and landing page optimization.

Marketing Technology Sector Map (SEM)

Acquisio was founded in 2003 and is based in Canada. It has raised $12.1 Million to date. Acquisio is a performance media solution that enables digital marketers to optimize their search campaigns and report on social, mobile, and display initiatives.

Adobe acquired search-marketing firm Efficient Frontier in November 2011 for $400 Million. Efficient Frontier was founded in 2002 and raised $15 Million from Redpoint Ventures, Mitsui and Co, and Cambrian Ventures. Adobe is stitching together many acquisitions to create the Adobe Marketing Cloud. Adobe’s paid-search capability is part of Adobe Media Optimizer solutions.

DoubleClick offers a variety of ad technology products and solutions to advertisers, publishers and agencies. DoubleClick Search is the product name for their search campaign management tool.  Google acquired DoubleClick for $3.1 Billion in 2007. It reportedly generated $300 Million in revenue in 2006. Some advertisers do not like the conflict of interest inherent in having a paid-search platform and a search engine under the same roof. Others advertisers see that relationship as an advantage.

IgnitionOne is a digital marketing company that offers a variety of cloud-based marketing solutions. Its integrated Digital Marketing Suite (DMS) empowers marketers to buy, manage, and optimize digital media across search, display, social, and mobile platforms, as well as understand clients through data management and cross-channel attribution.  It was founded in 2001 and is based in New York. It has raised $68.1 Million in funding and has 369 employees on LinkedIn.

InsideVault is a next-generation search-marketing platform. It was founded in 2011 in California and launched its platform in 2013. It has an unspecified amount of venture funding.  It has a growing roster of competitive replacements of Marin Software and Kenshoo. It claims to have built the best performing platform in its sector due to its advanced architecture and superior algorithms.

Kenshoo was founded in 2006 in Israel. It has raised $70M to date. Kenshoo initially focused on search marketing and has expanded to mobile, social and display. It has expanded via organic growth and acquisition. It acquired Adquant, a social ad tool in September 2014.

Marin Software (NYSE:MRIN) is the only publically held paid-search vendor that is pure-play.  The public markets have hammered Marin’s valuation from $425M at its IPO in March 2013 to $237M as of April 14, 2015.  Savvy investors realize that Marin Software does not have typical software margins because it includes pass-through advertising revenue in its financial statements.

SearchForce was founded in 2004 and raised $3.6M in 2012. It is located in California.

Other Paid-Search Solutions

There are vendors that offer point solutions for various pieces of the paid-search value chain. The following section highlights a few players.

Ad Text Optimization

Advertisers must create and update the ad copy that appears on search engine results pages. For advertisers that are managing more than a few hundred keyword combinations, these tools will help optimize the ad text creation process.

Boost Media, formerly known as Boost CTR, provides a network of ad copywriters that create and optimize ad copy. Boost Media has raised $32 Million, with its most recent funding of a $19 Million Series C on November 18, 2014.

Datapop offers several products, one of which generated ad copy for search results. Datapop raised $9.2 Million. Criteo acquired Datapop on February 18, 2015.

Bid Optimization

Campanja was founded in Stockholm with offices in California. The company raised a $5 Million Series A on February 13, 2014.

AdCore is based in Israel and was founded in 2003. Investors unknown. AdCore offers solutions for Search, Display, Mobile and managed services.

Keyword Optimization

WordStream raised $28 Million, including a $9 Million Series C on July 8, 2014. WordStream has a significant number of small and medium businesses (SMB) as customers. It offers popular graders for Adwords, Bing Ads and Adwords landing pages.

Advertising Agencies with Proprietary Tools

ESV Digital is a digital marketing agency with proprietary pay-per-click platform for search.

It was founded in 2004 in France and claims to have 200 customers with $300M in media spend under management. It has a staff of 180 people across seven offices.

Some of more recent trends we’re seeing in this sector include: 

No longer a one-search-engine horse race.  Microsoft Bing Ads’ strong revenue growth and Yahoo’s renewed focus on its search engine business mean that advertisers have more viable options in addition to the dominant Google Adwords platform.  Further, recent moves by Bing/Yahoo to gain default search engine status on Firefox and potentially Safari may shift search query volume away from Google. Pending regulation and legal pressure from the European Union may curb Google’s hegemony on the old continent. There are other search engines with significant presence in other geographies like Baidu in China, Yahoo! Japan, Naver in South Korea, and Yandex in Russia. There are also niche search engines like America Online and Ask.  Search marketers who want to grow globally or compete more effectively will expand their efforts past just using Google Adwords.

Advertisers are moving from agencies to manage search in-house. While many advertisers continue to hire advertising agencies to manage their paid-search campaigns, an increasing number are managing paid-search in-house. Companies are motivated to build core competency around search since it often represents the largest spend in their overall marketing mix. Because agencies charge on a percent-of-spend basis, there is a tipping point where it can be more economical to bring search in-house. 

Search engine marketing solutions are expanding their offerings. Given fast user and revenue growth in mobile and other channels like social media, paid-search vendors are expanding their capabilities through in-house development and acquisitions. Marin Software acquired SocialMoov (a Facebook ad platform) and Perfect Audience (a display and retargeting tool). Kenshoo acquired Adquant (a social ad tool). IgnitionOne acquired HumanDemand (a mobile demand side platform). Google acquired Adometry (an attribution tool).

Marketing Clouds are consolidating the marketing stack.  Enterprise software mega-vendors like Oracle, Adobe, Salesforce, IBM, as well as other marketing and advertising technology and technology vendors, are vying to become digital marketing hubs. They are acquiring various companies to broaden their offering. Today, Adobe is the only enterprise software company that offers search engine marketing solutions via its acquisition of Efficient Frontier.  Other mega-vendors may look to M&A as a way to catch up in search engine marketing. 

Large advertisers are building and buying proprietary tools.  Some of the largest paid-search advertisers like Amazon, eBay, and Priceline have built proprietary technology or acquired search engine marketing companies.  According to this article in Ad Age, Google’s top 25 search advertisers spent $1.34 Billion in 2013. According to the same article, Amazon was the #1 advertiser, spending $157.7 Million, and Priceline Group was the # 2 spender with $82.3 Million. The largest advertisers are pursuing a competitive advantage strategy with proprietary search technology capabilities. For example, Priceline acquired Qlika in March 2014 for $15 Million to $20 Million. Qlika was founded in 2012 and raised $1.7 million.

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