Twitter has made its largest acquisition to date with the purchase of MoPub, a mobile advertising company, bolstering its ad sales platform as it prepares to go public in coming months.
The deal will help automate ad buying on Twitter and broaden its partnership with traditional media companies. The acquisition is part of the messaging platform's push to boost revenue in the run-up to an initial public offering, which has included plans to work more closely with TV companies and develop ecommerce services.
MoPub helps advertisers target users more specifically and in real time, for example during live events. It will continue to allow agencies to buy ads across a large network of websites, not just Twitter, paving the way for an expansion of Twitter's services beyond its own site for the first time.
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"Mobile is obviously key to Twitter as a whole and to our advertising platform," said Kevin Weil, Twitter's vice-president for revenue products. Allowing advertisers to buy ads in real time, at the instant they are delivered to the app user, improves targeting and relevance for both brands and users, he said.
EMarketer estimates that Twitter will make more than $300 million from mobile in 2013, more than half of its global advertising revenues.
The MoPub acquisition could be Dick Costolo's biggest deal as Twitter's chief executive, ahead of a much anticipated public offering, which could come as soon as early 2014.
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Priced at 16 million Twitter shares, according to one person familiar with the matter, the deal could value MoPub from anywhere between less than $300 million and more than $400 million, based on Twitter's share price in the highly illiquid secondary market.
The purchase of another advertising technology company that operates in the so-called programmatic buying sector follows AOL's $405 miollion Adapt.tv deal last month.
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MoPub serves 2 billion ads a day on sites including blogging platform WordPress, games publisher ngmoco, and TuneIn, a radio app. The mobile advertising exchange had a revenue run rate of $100 million in May, 11 times the level during the same time the year before.
Jim Payne, chief executive of MoPub, said the companies were a "natural match" because they were both focused on mobile, and he hoped to grow the business using Twitter's investment.
Mr Payne and Nafis Jamal, two of the three founders of MoPub, were executives at AdMob, a mobile advertising company bought by Google for $750m four years ago. AdMob is now MoPub's biggest competitor in the market for mobile advertising.