Montreal’s District M and San Francisco’s Sharethrough, two digital advertising companies, will merge into one entity.

The pair of companies made the announcement Tuesday. They say the merger will create “one of the largest independent omnichannel ad exchanges in the world.”

The name of the combined company will be announced in the next few weeks as the deal is formally closed.

The move comes as a result of two main reasons. “First, it puts them in a better position with buyers, who are working with fewer, but larger exchanges,” wrote AdExchanger. “Second, the two companies will double their revenue, putting them in a better position to potentially go public.”

District M’s JF Cote will move forward as the CEO of the new company. He said the merger can allow the companies to significantly grow revenue and its publisher footprint with an omnichannel strategy.

“For publishers, the most strategic partners are the ones that can drive the most quality, diverse revenue. For advertisers, the most strategic partners are the ones with the most scale and performance.”

The 140 employees across both companies will now join forces across eight offices in the US and Canada, including in Montreal. Dan Greenberg, Sharethrough’s CEO, will become President of the combined company.

The changing landscape of digital media advertising

According to the IAB, buyers report that their investments in digital media will increase by 14% in 2021. Meanwhile, their traditional media budgets will drop by 5% over the same period.

The companies emphasized this current shift happening in the consumption of digital media. Because of this, they want to go all-in on their market offering with native, display & video on desktop, mobile and connected TV.

The combined company can now boast over 40,000 connected publisher websites and apps. This means that they’ll be able to offer advertisers more scale than before.

Moreover, it will invest more “to enhance every impression and creative to drive better performance for advertisers and publishers along with an improved ad experience for web users. A big focus will be on bringing enhanced ads concepts to new formats and devices including instream and CTV.”

Gives the company a ‘seat at the table’

The problem that smaller agencies face, noted AdExchanger, is that buyers are doing supply path optimization (SPO) and cutting down on the number of exchanges they work with. Smaller players are being weeded out while larger players are able to attract more advertisers since they offer more publishers.

A merger helps stave off agencies from getting left out of potential business.

Combined, the two companies will be the fourth-largest, independent, private exchange, Greenberg said. Companies that aren’t among the top-ranked exchanges are most likely to get cut.

“To operate at this level of scale gives us a seat at the table,” Greenberg told AdExchanger.

“For advertisers, the most strategic partners are the ones with the most scale and performance,” Cote said in a statement. “Our combined company is that partner, built for the modern advertising ecosystem.

What they did before

Since 2016, after three rounds of funding, District M has raised a total of $39 million from the Fonds de solidarité FTQ (FSTQ), Investissement Quebec (IQ) and Export & Development Canada (EDC). District M previously raised a series C of $19 million to invest in the combined company.

The company has offices in both Montreal and New York, and possesses a growing network of 43,000 advertisers and 650 publishers across 30,000 websites and apps.

Meanwhile, founded in 2008, Sharethrough is one of the world’s largest ad exchanges. It maintains direct connections to every major Demand-Side Platform (DSP) and over 12,000 publisher websites. It powers over 350 billion monthly impressions.

Sharethrough raised $30 million US in venture capital to date.

Greenberg was previously named Ad Age’s Top 40 under 40, an honouree in Inc.‘s 35 Under 35, Forbes’ 30 Under 30, and an Ad Age Media Maven.

According to LinkedIn, District M’s headcount has declined 8 percent over the past two years, while Sharethrough’s headcount has declined 37 percent. Both District M and Sharethrough turned a profit last year, Greenberg told AdExchanger.