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Digital advertising firm GumGum cuts 25% of staff as the coronavirus' impact ripples through the ad industry

Phil Shraeder, CEO, GumGum
  • Contextual advertising firm GumGum laid off 25% of employees across its sports and advertising businesses this week, citing the impact of the coronavirus.
  • The company is one of a handful of firms that provides software to help marketers adapt to privacy laws and the phase-out of third-party cookies.
  • GumGum closed $22 million in Series D funding in February, and CEO Phil Schraeder said that the layoffs are intended to help the firm weather a volatile ad market.
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The economic impact from the coronavirus continues to hit the advertising industry.
Santa Monica, Calif.-based adtech firm GumGum laid off 25% of employees this week, the company confirmed to Business Insider. CEO Phil Schraeder said the cuts are a direct result of dropped revenue from coronavirus.
GumGum runs two businesses: An advertising business and a sports arm. The former uses artificial intelligence and software to match contextually relevant ads with content. The sports business sells computer-vision software that brands and sports teams use to analyze sports sponsorships.
Schraeder confirmed that the layoffs hit both businesses. He made the announcements during an all-hands meeting on Monday and posted a blog about the layoffs.
GumGum, started 12 years ago, raised $22 million in Series D funding in February, and a total of $58.8 million. GumGum employs about 360 people, according to LinkedIn data.
"We are financially sound and in this for the long haul," Schraeder said. "We just needed to appropriately adjust our org and structure to support that new reality. Our philosophy was to look at the data — it might feel painful, awful, and hard for so many, myself included, but we don't want to look over our shoulders."
He said GumGum's second-quarter revenue was hit similar to numbers that the trade organization Interactive Advertising Bureau released that 69% of publishers and adtech companies have reforecast their revenue to reflect drops between March and June. Those companies expect a 21% drop in digital ad revenue during that time.

The ad industry has been hit hard by the virus

Adtech sources have named GumGum as a possible acquisition target this year as privacy laws like California's Consumer Privacy Act and Europe's General Data Protection Regulation restrict how advertisers use third-party cookies. Apple and Google have also clamped down on third-party cookies to target ads to people.
GumGum is the latest in a growing string of advertising-based companies slammed by the effects of the coronavirus.
Adtech firms VideoAmp and Sojern, holding companies WPP and Omicom, and direct-to-consumer brands like ThirdLove have also cited coronavirus in a wave of recent layoffs.
"I want to be able to look at the team that's here and say we got this and we can work through the volatility together," Schraeder said. "I hope that we're wrong — I hope the revenue comes in greater than we ever anticipated and that will allow us to potentially bring people back."
SEE ALSO: Digital ad firms are finding themselves pinched between publishers and advertisers, and industry insiders say some could go under
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Source
https://www.businessinsider.com/gumgum-lays-off-25-of-employees-citing-the-coronavirus-impact-2020-4?IR=T

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