Kargo Acquires Ziggeo to Expand Footprint Into Online Video

Kargo is acquiring video software-as-a-service company Ziggeo to create a bespoke online video offering. Kargo, best known as an ad-tech firm that offers software to connect publishers and advertisers, is more specialized than a typical supply-side or demand-side platform, with a focus on unique ad units and advanced features, a space known in the industry as "rich media." This is where Ziggeo comes in. The video platform's customizability makes it ideal for Kargo’s vision of creating bespoke online video ad units, said Ziggeo founder Oliver Friedmann. The SAAS platform is not in the advertising business. In fact, its use cases include proctoring online tests and tracking systems for job applicants. Kargo will maintain Ziggeo’s software-as-a-service business while focusing new technological advancements of the underlying Ziggeo software toward ad tech, said Kargo CEO Harry Kargman. The Ziggeo acquisition is the latest in a string of deals and new business lines for Kargo. In August, 2020, Kargo acquired Rhombus, which focuses on targeting social embeds within articles. In March, 2021, the company unveiled Fabrik, a content management system for publishers. Later that year, Kargo acquired StitcherAds, which specializes in ecommerce-focused ads on social platforms and in March 2022, the company bought attention-focused mobile ad-tech business Parsec. Criteo Completes Revised Deal to Acquire Ad-Tech Firm Iponweb Terms of the Ziggeo deal were not disclosed, but Kargman said the four M&A deals, including Ziggeo, cost $75 million in cash and equity in upfront costs. This figure does not include the full purchase price of Ziggeo; according to the terms of the deal, the majority of the price is paid on the backend and will be tied to performance metrics, a spokesperson said. Kargo bought StitcherAds for $64 million. Kargman said the company grew 45% in 2021 and is on track to grow another 40% in 2022 in terms of net revenue. The company surpassed $100 million in net revenue in 2021, with a spokesperson noting their gross revenue is much larger. Kargman said the company’s goal is to offer innovative ad units across media. "Our goal … is to run as few of those [impressions] as standard rectangle and transform as many of those into Kargo unique formats that produce results at higher CPMs," Kargman said. "That's better for the advertiser and better for the publisher." A place for digital video in the shifting media mix Kargo’s extension into new verticals comes at a time when there is increasingly little wiggle room in media budgets, as privacy changes dampen the effectiveness of social platforms like Meta and newer areas of media, like connected TV and retail media, woo advertisers. Kargo, which was founded in 2003 and counts 350 employees, started in the mobile advertising space, said Scott Bender, partner and global head of client strategy at ad-tech consultancy Prohaska Consulting, who has worked with Kargo as a client. "Mobile is not just an end game unto itself," he said. "This is just fortifying that they’re providing a full solution tech stack." The Ziggeo acquisition grows Kargo’s footprint in online video, an industry which has had growing pains as publishers struggle to create video at scale, given its higher cost of production, and to find the right audience to monetize, Bender said. Still, U.S. ad spend on digital video, including videos on social networks, is projected to make up 53.1% of total U.S. display ad spending in 2022, growing to $76.2 billion from $60.25 billion in 2021, per eMarketer. Online video’s buzzier cousin, connected TV, will only account for $18.9 billion in spend in 2022 or 13.2% of display advertising, although it is growing 6.6% faster. Bender said Kargo’s investment into online video could pay dividends given the persistent lack of high quality inventory. "Video continues to grow. The CPMs it’s garnering is significantly higher than display," Bender said. "There’s significant amount of demand."

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