XLMedia, a digital marketing company has paid up to $19 million to acquire ExciteAd Digital Marketing Ltd, an Israeli social and mobile gaming marketer. This was revealed in an additional press release from XLMedia. The initial press release had indicated of an acquisition by XLMedia of about $19 million without identifying the company to be acquired. This had left industry observers puzzled.
The later press release issued cleared up the matter by giving the name of the company to be acquired as ExciteAd Digital Marketing. The company trades using the name ‘DAU-UP’ and its domain is (www.dauup.com). The company’s specialty is in social and mobile advertising, targeting at acquiring users for social gaming apps.
ExciteAd Digital Marketing Ltd operates in the US market and other English and German speaking markets. Its services are to game developers of social and mobile platforms. Its charges are either performance based by use of CPI (cost per installation) or by management fee on marketing spend basis.
XLMedia spokesperson said that EDM possesses an outstanding growth track record, a reflection of the expansion of mobile and social gaming market. The company was established in 2010, and for the year ended 30 June 2014, it had revenues of $12.8 million and Profit before tax was $3 million. It employs 27 people.
Market specialists have observed that social gaming demand is expected to continue growing. This is because of demand in Smartphone and mobile markets plus the games are freely available.
During the launch of IPO in March, XLMedia gave diversification and expansion as its main strategies. Acquiring EDM is therefore complimentary with its current business. It will diversify its business into new products and markets, target new customer base and provide growth opportunities in the existing markets.
Almost 50% of EDM revenues are generated from mobile users. These are the same people whose numbers are many in online gambling industry. According to Gambling Capital, it is anticipated that by 2018, mobile users will have a 44% share of the gambling market.
Acquisition of EDM is a diversification of XLMedia into new regions geographically. This is because EDM’s main market is the United States with other revenues coming from other German and English speaking markets, all which are outside XLMedia Scandinavian markets.
XLMedia will acquire the entire issued share capital from EDM current shareholders led by founder and the current CEO Idan Nizri for a consideration of up to $19 million. The share capital is debt free. $12 million will be paid immediately in cash, while two other payments totaling up to $7 million will be paid based on the earnings of the first and second after July 1 2014. 71 % of which may be paid by issue of new shares.
The founder of the company, Idan Nizri, will be in the company for at least two years and can have a seat on the board of directors of EDM.
XLMedia CEO said that the acquisition of EDM compliments XLMedia business. It is enhancing earning immediately, strengthens its US reach, diversifies social gaming, extends the gambling expertise of the company and increases customer base.