UPDATED 09:00 EST / JULY 18 2017


Zeta buys AI startup Boomtrain to boost marketing cloud

Hoping to add another crucial piece to its cloud marketing services, Zeta Interactive Corp. today said it’s buying Boomtrain Inc., a five-year-old marketing technology startup that uses machine learning to send personalized brand notifications to consumers.

Zeta, a marketing technology company that does business as Zeta Global, plans to incorporate Boomtrain’s machine learning technology as a layer across its marketing cloud that would “allow everything to communicate and make better decisions,” David Steinberg, Zeta’s chief executive officer and co-founder with former Apple Inc. CEO and Pepsico President John Sculley, said in an interview.

Steinberg said the deal is chiefly for the technology and technical talent, since Boomtrain didn’t have significant revenue. The purchase price wasn’t revealed, but sources close to the deal pegged it at $35 million to $40 million.

“By merging this into our marketing cloud and making this the machine learning layer, it’s going to catapult us,” Steinberg said. In particular, Boomtrain’s technology will become the personalization engine for the ZetaHub digital marketing hub. As a result, a client could combine its customer relationship management data with Zeta’s customer-prospect database and determine in real time who’s primed to buy a particular product.

The acquisition is 10-year-old Zeta’s 10th, and its third in the San Francisco Bay Area. In addition, Boomtrain’s Bangalore operation will become Zeta’s third office in India. Zeta also said that along with Boomtrain’s patents, Zeta will now have one of the largest machine learning patent portfolios in martech.

Zeta won’t divulge its revenue, but sources close to the company said it’s valued at $1.3 billion as of its $140 million late-stage fundraising in April. It needs to bulk up, given that bigger rivals such as Oracle Corp., Adobe Systems Inc., IBM Corp. and Salesforce.com Inc. all have been snapping up ad and marketing tech firms in the last few years to solidify their own marketing clouds.

The company pitches itself as unique thanks to its database of more than 350 million permission-based profiles, nine patents in machine learning and process automation, and 700 engineers in India that can provide both managed services and the kind of self-service its rivals provide.

Although Boomtrain claimed 120 customers, many of them large media companies such as Dow Jones & Co., CBS Corp. and Conde Nast, the company found it difficult to capture large contracts from them because it lacked the size and scale big companies customarily look for, Steinberg said. Some executives have left in the past year.

Boomtrain’s 60 current employees will be joining Zeta, which will have a total of more than 1,300 employees. Boomtrain co-founder Chris Monberg will become Zeta’s first chief technology officer. The startup had raised $14.8 million in five rounds from nine investors that included Sierra Ventures, Lerer Ventures and Cota Capital, according to Crunchbase Inc.

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