Inuvo grows consumer data trove with Silicon Valley buy

Inuvo, a publicly traded technology company in Little Rock, has acquired NetSeer of Sunnydale, Calif., in exchange for 3.53 million shares of Inuvo’s common stock.

Inuvo deals in advertising technology. Its primary product, SearchLinks, is used by digital publishers to populate their web pages with ads that are related to their content. Until now, the technology has been able to determine the subject matter of a given page from written words. With the NetSeer purchase, Inuvo now has access to the company’s in-image ad technology and will be able to deliver tailored ads based on the content of images and videos on the page.

Inuvo works with several web publishers including Reuters and Healthline, said Wally Ruiz, Inuvo CFO. It is also in the digital publishing business, as owner of Alot, a site that features articles on a broad range of topics, from health, travel, finance, to education. The publishing side comprises about 50% of Inuvo, while ad tech comprises the other half, Ruiz said.

With the NetSeer acquisition, Inuvo will add several hundred publishers to its client list, which already contains about 1,000.

The move also means more advertising revenue sources for Inuvo. In the past, the company turned to Google and Yahoo for access to ads, but NetSeer has more direct relationships with advertisers and ad agencies. And with what Ruiz describes as little overlap in the companies’ clientele, he looks forward to offering Inuvo customers in-image advertising for the first time, in addition to introducing NetSeer’s clients to SearchLink. “There’s going to be a lot of cross-selling, I think,” Ruiz said.

The company anticipates the acquisition “will be a strong contributor to growth” and is expected to add to Inuvo’s earnings within a year, chairman and CEO Richard Howe said in a press release.

In the U.S., digital media ad spending topped $72 billion in 2016, beating out television ad spending for the first time, according to eMarketer.

CONSUMER DATA ACCESS
In addition to new products and ad revenue sources, Inuvo will now have a much broader collection of consumer data for behavioral-targeted advertising, which is drawn from web-browsing habits. It’s a tactic that is widely used, although it faces mixed reactions from the public because of its potential invasiveness weighed against added convenience and customization.

“Some people don’t like it,” said Ruiz, describing a situation where, for example, an ad for South Pacific beach vacations might turn up on the New York Times web page after the individual searched for a Tahiti resort online.

Inuvo was already in the behavioral targeting business, but Ruiz expects it will be more of a focus moving forward.

Inuvo has 75 employees – 70 of which are in Little Rock – and the NetSeer purchase will add about 20. Ruiz said eight employees at NetSeer would be let go, and that he does not foresee a move of any Little Rock staff to Silicon Valley.

This is Inuvo’s first major acquisition since 2012, when it bought Vertro – a New York-based online advertising and search company and the original owner of Alot – for an estimated $19 million, according to the Tampa Bay Business Journal.

The Vertro buy resulted in Inuvo doubling in size, said Ruiz, who would not reveal details about the NetSeer purchase except to say that its contributions to the growth of the Inuvo are “significant.” The company plans to publicly reveal more details about the NetSeer acquisition, in addition to its fourth quarter 2016 report in a conference call on Feb. 13.”

Projections released Feb. 6, showing the company expects net revenue to be $19.7 million for the quarter, up 12.5% from the previous year, and $71.5 million for all of 2016.