With Blackstone's Funding, Does Vungle Pose a Threat to Facebook and Google?

Stephen L Kanaval  |

“Vungle represents a key growth engine for the mobile app ecosystem. Our investment will help deliver on the company's tremendous growth potential and we look forward to partnering with management to extend Vungle's strength across mobile gaming and other performance brands."

That was Sachin Bavishi, Principal at Blackstone, after the private equity firm invested $750 million in the mobile advertising engine, Vungle. If readers are not in the advertising space, the name may not mean much, but the deal signals a challenger to Google and Facebook’s mobile advertising fiefdoms.

What does Vungle do?

Featured in Mary Meeker’s 2017 trend report, Vungle’s approach to advertising is performance advertising and it counts the NFL, P&G, Pandora, Microsoft and Warner Brothers as clients. The company serves more than 4 billion video views per month on over a billion unique devices, and is consistently ranked No. 1 for cross-platform user retention by industry mobile performance indexes.

In a world where ad-blockers make the internet palatable, Vungle is trying to offer sophisticated marketing in a world where advertising on websites are often cheap and not very creative. The company usually operates in the mobile ad space and their ads are often playable or interactive leading users to download an app – Vungle does extremely well for itself in the mobile gaming space. This is a great space to be in as global app downloads exceeded 194 billion in 2018, up 35 percent from 2016, according to App Annie’s State of Mobile Report, which added that consumer spend in apps reached $101 billion during the same year, up 75 percent from 2016.

This deal with Blackstone buys out all the private equity at Vungle and clears the company with former CEO, Zain Jaffer. Jaffer had filed a wrongful termination lawsuit against his former company after Jaffer was accused of felony assault and child abuse. Jaffer was promptly dismissed, but after the charges were dropped, he took Vungle to court.

This is all water under the bridge now, so with the decks clear, can Vungle actually compete with advertising monoliths, Google  (GOOG)and Facebook  (FB)(the company actually received funding from Alphabet's GV)?

Many in the advertising space actually see Vungle gaining momentum as an independent advertising alternative. The company rolled out a make-your-own-ad platform in the midst of its CEO controversy last year, so the company is competitive, but seems to work better as a cutting-edge advertiser merging the engagement of gaming and advertising into one package.

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