As we reported earlier, vertical ad network builder Adify is being acquired by Cox Enterprises, through its subsidiary Cox TMI. Adify will operate as a wholly owned unit of Atlanta-based Cox and will continue to be headed by Russ Fradin, president and co-founder of Adify. The three-year-old Adify will remain in San Bruno, CA. with sales offices in New York, Alexandria, Va., London, Berlin and Singapore. More details in this release issued by Cox. In a post on Adify's official blog, the company said that Cox approached them as Adify began raising a third round of funding designed to support its expansion plans.
I spoke with Joelle Gropper Kaufman, Adify's VP of marketing, who told me that the $300 million-plus deal was done in cash and includes a set of incentives, based on performance results and growth, designed to keep the current management team intact. The deal has been signed and is expected to close within the next two weeks. Kaufman said the two companies have been involved in talks for the past several months. Cox began actively looking for a company in the online space more than a year ago: "They looked at our competitors, they looked at technology companies and eventually, they looked at us."
Cox spoke to a dozen of Adify's clients before making the final offer. Adify has helped build 108 vertical ad networks for media companies such as Forbes, Martha Stewart Living Omnimedia (NYSE: MSO), NBC Universal (NYSE: GE), Reuters (NSDQ: RTRSY), Time Warner (NYSE: TWX), The Washington Post Co. (NYSE: WPO), The Guardian and others. "One of the benefits of being a privately held, big company with tremendous assets like Cox, is that you can take a strategic and studied look at an opportunity," Kaufman said "For well over a year, they have been studying the online ad marketplace and assessing how they want to engage with their partners. And frankly, our customers, when we've told them about Cox, have said that it's a terrific home for Adify, because we partner with them already."
There are several units under the Cox umbrella, including Cox Communications (cable television distribution, advertising solutions and Travel Channel); Cox Newspapers (includes national direct mail advertising); Cox Television (broadcast and television sales rep firms); Cox Radio, Inc. ([NYSE: CXR] broadcast radio stations and interactive web sites); Manheim (vehicle auctions, repair and certification services and online tech products) and Cox Auto Trader (publisher of car magazines and the AutoTrader.com site). Even with all those properties that it will now have some relation to, Adify plans to remain tightly focused on the Web. It's unlikely that Cox intends to use it as part of the Project Canoe cable ad targeting initiative backed by Comcast (NSDQ: CMCSA), she said. "Cable advertising is not our area, though I wouldn't rule anything out in the future," she said. "I know Cox's interest in acquiring us was based on their belief that the internet will represent a $45 billion ad market within the next five years. That's where the focus will be going forward."
By David Kaplan