Snapchat is shopping for ad tech companies to help bolster its appeal to marketers, a process that led the company to have acquisition talks with AdRoll, Business Insider has learned.
Snapchat's main targets are startups in the marketing tech and ad tech sectors, as the social network owned by parent company Snap Inc. seeks to grow its ad business and allay investor concerns that have punished its stock price.
"They're looking for some business, or a set of businesses, that can help them demonstrate the efficacy of their ads," a person familiar with the matter told BI. Snap acquired Placed for reportedly over $200 million in June to give it access to third-party measurement on tracking real-world purchases and store visits.
Discussions with San Francisco-based AdRoll began shortly before Snap's March IPO and continued after. Although there were multiple meetings between the two companies, an offer price was never put on the table and AdRoll is currently in more serious discussions with several other bidders, the person said.
A Snap spokesperson declined to comment for this story. AdRoll didn't respond to multiple requests for comment on Friday.
AdRoll has raised roughly $91 million in venture capital funding to date and claims to be the most widely-used independent programmatic advertising platform, with more than 35,000 customers. The company is borderline profitable and on pace to do over $300 million in revenue this year, another person familiar with its business said.
Feeling the pressure
Buying AdRoll would give Snap a deeper foothold in ad targeting and campaign management along with e-commerce expertise, a third ad industry insider told BI.
"Snapchat buying AdRoll would be somewhat analogous to Google buying DoubleClick," the person said, referencing Google's blockbuster $3.1 billion purchase from 2007 that signaled its push into online advertising beyond its own scope.
Although incredibly popular with younger users, Snap is under pressure to convince advertisers that its ads can deliver, especially compared to proven rivals like Facebook and Google.
Snap's stock sank below its $17 initial public offering price this week, as a series of Wall Street analysts downgraded the stock due to Snap's slower-than-expected growth and fierce competition from Facebook-owned Instagram.
"We have been wrong about Snap's ability to innovate and improve its ad product this year (improving scalability, targeting, measurability, etc.) and user monetization as it works to move beyond 'experimental' ad budgets into larger branded and direct response ad allocations," Morgan Stanley analyst Brian Nowak wrote in a note to clients earlier this week.
Although Snap's talks with AdRoll have not gotten serious enough to progress to an offer, Snap is actively looking at other firms in the broad and increasingly overlapping field of advertising and marketing technology. Another name that has been bandied about as being on Snap's radar is Segment, a customer data tracking tool for marketers, although it could not be learned if the two companies have had deal talks.
Do you know more about Snap's acquisition talks? Contact the author securely and discreetly via email (aheath@businessinsider.com) or via Twitter direct message.
SEE ALSO: Why advertisers should pay attention to Snapchat's new maps feature
Join the conversation about this story »
NOW WATCH: RICH GREENFIELD: There is just one way for Snapchat to survive Facebook