Video ad network operator YuMe is hoping to grow its already successful business even more with a trip to the public markets, according to a recent filing.
YuMe’s platform spans personal computers, tablets, smartphones, set-top boxes, game consoles and Internet-connected TVs to reach a total of 257 million unique visitors (as of the count in May).
At the core of YuMe’s system is the Placement Quality Index — a proprietary set of algorithms that optimizes the placement of ads in terms of brand awareness, message recall, brand favorability and purchase intent. And this technological prowess has snagged big customers including American Express (AXP), AT&T (T), GlaxoSmithKline (GSK), Home Depot (HD) and McDonald’s (MCD).
If forecasts are correct, there’ll be plenty more customers where they came from. Research firm eMarketer predicts that U.S. digital video ad spending will go from $4.14 billion in 2012 to $8.04 billion in 2016, riding on the rapid growth in mobile.
Still, Wall Street might give this particular transaction a thumbs-down.
You see, a couple weeks ago, rival Tremor Video (TRMR) suffered a disastrous IPO. The company priced its offering at $10, which itself was below the initial $11-$13 range, before plunging to its current price around $7.
Granted, on a side-by-side basis, YuMe looks better …
| 2012 Metrics | Tremor Video | YuMe |
| Revenues | $105.2 million | $116.7 million |
| YOY Change | +16.4% | +70.3% |
| Net Income | -$16.6 million | +$6.3 million |
… but IPO investors looking more broadly at the business type and less at the individual accomplishments could put a lot of weight on the Tremor deal’s wreckage, leaving YuMe holding a less appealing bag.
While YuMe does contend that it’s differentiated in that it’s less “programmatic” than Tremor, this might not be a big enough distinction to get Wall Street excited.
YuMe plans to issue its shares on the New York Stock Exchange under the ticker of “YUME,” and lead underwriters include Citi (C) and Deutsche Bank (DB).
Pricing terms were not disclosed.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
