Madhive acquires Frequence and creates a digital advertising hub for local businesses and small and medium-sized businesses

Local CTV ad tech player Madhive is acquiring Frequence, a provider of ad sales and workflow software and services to local media companies. It’s a move that combines relevant technology and local expertise, expands Madhive into multi-channel advertising and supports its broader goal of being a one-stop advertising hub for clients serving local markets and small and medium-sized businesses.

Financial terms of the deal, announced Tuesday, were not 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 merger plans. As part of the deal, approximately 350 Frequence employees join Madhive, bringing its total headcount to over 500. This includes Cheli, who will serve as Madhive’s chief strategy officer following the acquisition.

Madhive has made a name for itself as a player in the local CTV and premium digital video space, serving as the proprietary data and CTV programming stack partner for major broadcasters including Fox, Tegna and Scripps for local businesses. It is an end-to-end CTV platform that includes an internal bidder, device graph and real-time optimization engine that manages over 20,000 daily campaigns across 210 DMAs with local precision. It is focused on increasing advertising reach for customers who have traditionally purchased broadcast or cable programming, shifting some of those budgets to CTV as part of its reach expansion business.

According to Potts, Madhive is valued at around $1 billion, and as it looks to grow its technology stack, it could collaborate on leasing, building or purchasing. This is where Frequence, another local player tackling a similar market, has become an attractive acquisition target thanks to its complementary software and services that are related to but different from what Madhive already offers. Frequence’s media workflow software and services enable local media companies to sell, manage and execute multi-channel digital marketing campaigns for their advertising clients through a self-service, customizable platform. Expands Madhive’s local advertising capabilities beyond CTV to include search, display, out-of-home, audio streaming, social media and more.

In deciding to purchase Frequence Technology rather than build or rent, Potts noted that in its desire to become a digital advertising hub for local and SMB businesses, it wanted to have as much of a vertical stack as possible to take full advantage of the margin economics, as well as the desire to execute turnkey.

“So when we saw Tom and his group and how they built everything turnkey so that small businesses had access to tools that only big advertisers had access to through agencies and other means, it was really exciting for us because we wanted to light up the communities local a truly extensive set of tools,” he commented.

Bringing what the other lacks

Putting the two together, the beauty that both CEOs cite is that each company has what the other doesn’t.

They unite complementary technologies, people and tools because the independent Madhive and Frequence have very little overlap, including in their respective products, services and customers.

Madhive has already built its own DSP with programmatic bidder, where Frequence has expertise in cross-channel sales planning and workflows, but has previously used partners to execute campaigns.

Now the two bring everything under one roof, combining Frequency’s software platform and workflow software with Madhive’s advertising decision engine and device graph, creating a closed-loop stack that’s connected internally. The combined company can offer a comprehensive, end-to-end platform that clients can use to plan, execute and optimize campaigns for local clients and advertising markets in an omnichannel environment. As mentioned, the result is a closed-loop stack that eliminates the need for additional hops between different partners in the ad chain and means that data is not lost because everything stays in the Madhive system, while still offering self-service features crucial for small and medium-sized businesses . It will also offer advanced features such as a one-click tool that helps set ad budgets with recommendations for how advertisers spend on specific channels.

For existing Madhive clients, this means the ability to reach not only CTV, but also digital, OOH and other advertising channels, where Frequence software also helps eliminate the hassle of building a multi-channel media plan. One example of tools tailored to local needs is Frequence, which offers a product called Smart Proposals, which is a front-end technology that recommends targeting parameters and products that SMBs should use to sell multi-channel campaigns – even if the local SME customer the client wants to target advertising at the national level. For existing Frequence customers such as Charter’s Spectrum Reach, Hearst and Beasley, this means access to CTV and Madhive’s infrastructure, where Cheli says customers know CTV must be part of their plans, alongside other channels.

Synergies bode well “because all partners are really looking for an omnichannel solution,” Cheli said.

Lots of room for locals

Enabling connected clients to sell omnichannel advertising to SMBs and precisely target across the various available channels is part of Frequence-Madhive’s appeal.

This is something Cheli said SMBs currently don’t have the option to do because it would typically require registering with a DSP and meeting certain minimum requirements, noting that some could use search and social media instead. However, just enter the easy-to-use interface and “suddenly you have this huge market open to you.”

He mentioned the ample space for local opportunities, both in the CTV space and other channels, and believes the local advertising market is much larger than most people think today.

“Even if you look at it from a CTV perspective, CTV (advertising spend) at the local level is still lower than at the national level,” Cheli said, adding that this is happening everywhere.

Advertiser Perceptions predicts that CTV advertising spending will exceed $21 billion this year in the United States alone.

And while Freequence’s local customers know that CTV should be part of the picture, Cheli noted that they also need to search, create additional programming channels, stream audio and wherever they can “to reach their target audience.”

“They could probably spend that amount much more efficiently if there was a system in place to allow that,” Cheli said. This is exactly what Madhive-Frequence aims to provide, serving as a connecting place for all advertising elements for local advertisers.

It’s worth noting that the lack of frequency overlap with Madhive also extends to its customer base. Frequence brings with it two major broadcast clients, including Nexstar and Charter’s Spectrum – two media groups Potts admitted Madhive was already keen to reach out to and can now leverage existing relationships through Frequence.

It also provides opportunities for the freelance ad agency market, which both Madhive and Frequence already target, but Potts believes there is less demand for self-service as they prefer managed services.

National localization

As for Madhive’s vision for the future, Potts said it is about “localizing nationally” and becoming a digital advertising hub for local markets and small and medium-sized businesses.

Part of this roadmap relies on Madhive’s technology built on the backend, which, together with Frequence’s tools, means it can “push segmentation in real-time at scale.”

In explaining how this would work, Potts described, for example, a Milwaukee company with a set budget that wants to advertise in all 50, or maybe 10, states. In a future scenario, said company could have a budget and select from a drop-down list of KPIs or outcomes (such as return on ad spend or ROAS, reach and frequency, or visitor traffic) in, say, Detroit. Once this KPI or score is achieved, the advertiser can real-time real-time reallocate their budget to the location they want to be underserved.

“This is where it gets really exciting because it drives spending efficiency,” he said, and the idea is to serve local business both in their home markets and small and medium-sized businesses that may want to advertise across the country.

Madhive currently works with holding companies, with most of the budget going to resellers, but Potts noted that the company has a specific geography, so some are “very excited” about these kinds of opportunities for companies such as secondary automotive companies, for example.

This is not yet a reality, but the company wants to make it happen.

Potts said this type of real-time feature would probably be available in about 18 months. Looking ahead, Madhive could buy companies that help it get to its destination faster, Potts said. He and Cheli “definitely won’t hesitate to make an acquisition that brings us to this vision,” the CEO commented, noting that it might be necessary to buy a small company to adopt more integrated measurement tools.

“We really want to win this game,” Potts said of becoming a one-stop advertising center for local businesses and small and medium-sized businesses.