Kargo Acquires E-Commerce Ad-Tech Firm for $64 Million
October 18, 2021
As seen on The Wall Street Journal
The company purchased StitcherAds as part of a growth plan that could include an eventual IPO, CEO Harry Kargman said.
Advertising-technology company Kargo Global Inc. has acquired StitcherAds, an ad-tech firm focused on driving e-commerce sales, for $64 million, Kargo said.
Kargo’s technology helps marketers buy ads that target certain types of consumers on the websites of hundreds of publishers, including on mobile and desktop devices. A growth area for the company has been in special ad formats meant to help retailers boost e-commerce, but Kargo’s offering wasn’t available on large social media platforms, said Harry Kargman, the company’s chief executive and founder. StitcherAds brings that capability, delivering paid ads for retailers and other brands across platforms including Facebook, Instagram, Snapchat and TikTok, he said.
“We realized we were only satisfying a small part of the total need of our retail clients,” Mr. Kargman said.
The deal, paid for largely with Kargo’s own cash and some stock, is part of the company’s broader vision for growth as it considers various paths, Mr. Kargman added.
The 18-year-old company hired investment bank Centerview Partners Holdings LP earlier this year to explore its strategic options, such as selling a minority stake to raise money for additional acquisitions, with an eye to a potential public offering or sale down the road, he said.
“We think this strategy will set us up over the next few years to potentially enter the public markets,” Mr. Kargman said.
Kargo is profitable, according to Mr. Kargman. It is expecting net revenue, which excludes costs like publishers’ fees, to exceed $100 million for 2021, including the acquisition of StitcherAds, he said. Before the deal, Kargo employed 225 people.
StitcherAds, which employs about 120 people, is based in Waterford, Ireland, and has a number of staffers in Austin, Texas. Clients include Macy’s Inc., Wayfair Inc., Saks Fifth Avenue and Bed Bath & Beyond Inc. Mr. Kargman declined to disclose its revenue.
The advertising-technology sector has seen a surge of deals and public offerings in recent months, triggered in part by advertisers’ investments in digital marketing as people spend more time shopping and consuming content online.
“The pandemic has accelerated all of the trends where consumers now feel much more comfortable shopping and buying online and picking up in store,” said Mr. Kargman.
Declan Kennedy, chief executive at StitcherAds, will now be general manager at Kargo Commerce, a new division that will combine both companies’ commerce ad functions. The StitcherAds brand will continue to exist under the new division.
Mr. Kargman said he doesn’t plan any layoffs at StitcherAds.