Local CTV ad tech player Madhive is acquiring Frequence, an ad sales and workflow software and services provider for local media companies. It’s a move that combines respective tech and local expertise, expands Madhive into omnichannel advertising and supports its larger goal of being the go-to turnkey advertising hub for clients serving local markets and small and medium business customers.
Financial terms of the deal, announced Tuesday, weren’t disclosed but the purchase is being funded by part of Madhive’s $300 million investment from Goldman Sachs a year ago.
StreamTV Insider spoke with Madhive CEO Spencer Potts and Frequence CEO Tom Cheli to discuss the acquisition and plans for the combination. As part of the deal, Frequence’s 350 or so employees are all joining Madhive, expanding its total workforce to more than 500. That includes Cheli, who is set to serve as chief strategy officer at Madhive following the acquisition.
Madhive has made its mark as a player in the local CTV and premium digital video space, serving as partner with proprietary data and programmatic CTV stack to major broadcasters including Fox, Tegna, Scripps for local businesses. It’s full-stack CTV platform includes an in-house bidder, device graph and real-time optimization engine that manages more than 20,000 daily campaigns across 210 DMAs at a locally precise scale. It’s focused on expanding reach for customers’ advertising clients that traditionally bought broadcast or cable by shifting parts of those budgets to CTV through its reach extension business.
Madhive is sitting around a $1 billion valuation, according to Potts, and in looking to grow its tech stack could partner to rent, build or buy. That’s where Frequence, another player in local going after a similar market, became an attractive acquistion target thanks to its complementary software and services that are adjacent but distinct from what Madhive already offers. Frequence’s workflow software and media services enable local media companies to sell, manage and execute omnichannel digital marketing campaigns for their ad clients through a self-serve, configurable platform. It expands Madhive’s ad capabilities for local beyond CTV advertising to also include search, display, out-of-home, streaming audio, social and more.
In opting to buy Frequence tech rather than build or rent, Potts noted that in its aim to become the digital advertising hub for local and SMBs, it wants to own as much of the vertical stack as possible to fully benefit from margin economics, alongside a desire to be turnkey.
“So when we saw Tom and his group and how they made things so turnkey for the small businesses to have some of the tools that only the big advertisers had access to through agencies and other means, it was really exciting for us because we want to light up local communities with a really extensive toolset,” he commented.
Bringing what the other lacks
In bringing the two together, part of the beauty cited by both CEOs is that the companies each have what the other doesn’t.
They’re unifying complementary tech, people and tools, as standalone Madhive and Frequence have very little overlap, including across respective products, services and clients.
Madhive already built its own DSP with a programmatic bidder, where Frequence has expertise in omnichannel sales planning and workflows but previously would have used partners to fulfill campaigns.
Now the two are bringing everything together under one roof, pairing Frequence’s frontend and workflow software platform with Madhive’s ad decisioning engine and device graph for a closed loop stack that’s connected within. The combined company can offer a comprehensive, end-to-end platform that clients can utilize to plan, execute, and optimize campaigns for local ad customers and markets in an omnichannel environment. As mentioned, the result is a closed loop stack, which eliminates the need for additional hops between various ad chain partners and means data isn’t lost as everything stays within the Madhive system, while still offering self-serve capabilities that are key for SMBs. It will also offer sophisticated features like a one-click tool that helps carve up ad budgets with recommendations for advertiser spend across specified channels.
For existing Madhive clients this means the ability to reach into not only CTV and but digital, OOH, and other advertising channels, where Frequence software also helps remove the hassle of building an omnichannel media plan. As one example of tailored tools for local, Frequence has a product called smart proposals, which is a front-end technology that recommends targeting parameters and products SMBs should utilize to sell omnichannel campaigns – even if its customer’s local SMB client’s looking to target at a national level. For existing Frequence clients, such as Charter’s Spectrum Reach, Hearst and Beasley, it means access to CTV and the Madhive infrastructure, where Cheli said customers know CTV needs to be part of their plans alongside other channels.
The synergies bode well, “because all of the partners out there really are looking for an omnichannel solution,” Cheli said.
Lots of headroom for local
Enabling combined clients to sell omnichannel advertising for SMB’s and precisely target across the various available channels is part of the Frequence-Madhive appeal.
It’s something Cheli said SMBs don’t have the ability to do today, as it would typically require signing up for a DSP and meeting certain minimums, where he noted some might go with search and social instead. But enter an easy-to-use frontend and “all of a sudden you’ve opened up this huge market.”
He cited a lot of headroom for local opportunity in both the CTV space as well as other channels and believes the market for local advertising is much larger than most people today think.
“Even if you look at it from a CTV perspective, CTV [ad spending] is still trailing at the local level that it is as the national level” Cheli said, adding this is happening everywhere.
Advertiser Perceptions projects CTV ad spending to surpass $21 billion in the U.S. alone this year.
And while local Frequence clients know CTV should be part of the picture, Cheli noted they also need to be doing search, additional programmatic channels, streaming audio and wherever they can “to reach their target audience.”
“They could spend that probably a lot more effectively if there was a system that allowed that to happen,” Cheli said. Which is what the Madhive-Frequence combination aims to deliver, serving as the house to connect all ad elements for local advertisers.
Notably, the lack of Frequence overlap with Madhive also extends to the client base. Frequence brings with it two major broadcaster clients including Nexstar and Charter’s Spectrum – two media groups Potts acknowledged Madhive already wanted to approach and can now tap existing relationships via Frequence.
It also brings opportunities for the independent ad agency market, a base both Madhive and Frequence each already target but where Potts believe there’s less need for self-serve as they tend to prefer managed services.
Localizing national
As for what Madhive envisions for the future, Potts said it’s all about “localizing national” and becoming a digital advertising hub for local markets and SMBs.
Part of that roadmap leans on technology Madhive built on the backend that along with Frequence’s tools means it could “move real-time segmentation at scale.”
Explaining how that would work, Potts described a Milwaukee business, for example, with a set budget that wants to advertise in all 50 states or maybe 10. In a future scenario, said company could have a budget and pick from a dropdown list of KPIs or outcomes (such as return on ad spend or ROAS, reach and frequency or footfall traffic) in say Detroit. Once that KPI or outcome is hit, the advertiser could, in real-time, move their budget over to a location they want that’s underserved.
“That’s where it gets really exciting because that gets into efficiency of spend,” he said, where the idea is to serve local business both in their local markets as well as SMBs that might want to advertise nationally.
Madhive works with holding companies now with much of the budget going through its resellers, but the company is geo-specific, Potts noted, so some are “getting really excited” about these kinds of opportunities for the likes of second-tier auto companies, for example.
It’s not a reality yet, but the company is eager to make it happen.
Potts said, fully baked, that type of real-time feature is probably about 18 months out. Looking ahead, Madhive could purchase companies that help get it there faster, Potts said. He and Cheli “are definitely not going to shy away from an acquisition that gets us to that vision,” the chief executive commented, noting it may need to buy a small company to incorporate more integrated measurement tooling.
“We’re ferocious to win at that game,” Potts said of becoming a one-stop advertising hub for local and SMBs.