Company also plans expansion into mobile ad space and a 2011 IPO.
Behavioral targeting-driven ad network Specific Media is hoping to capitalize on recent growth in online video advertising spend, and has acquired video ad company BBE to help it realize those ambitions. The purchase will give Specific an instant footprint in the online video space, with BBE's network currently reaching over 10 percent of U.S. users on a monthly basis, according to comScore.
BBE's media network will be immediately integrated with Specific's existing operations, with staff from the two firms consolidated under one roof. BBE's Vindico ad-serving platform will continue to operate under the BBE brand, however, and will seek to sell its technology as an independent offering.
"We've been looking at this space for quite some time," Specific Media CEO Tim Vanderhook told ClickZ. "We were trying to find a company that offered more than just a media network. Obviously that side is important, but the other pieces are the ad serving platform and BBE's original programming division," he said, predicting branded video content will "explode" over the next couple of years.
The company hopes its move into video will help it attract more spend from verticals such as CPG advertisers, which have been heavy early adopters of the format, but haven't historically gravitated towards display advertising. "It's easier to sell soap through a video spot than a banner ad," Vanderhook said, suggesting the merger will help plug gaps in both companies' repertoires. "Where they were strong we were weak; there's little overlap in our client base," he added.
According to Vanderhook, Specific plans to continue its expansion aggressively over the next twelve months, initially extending its new video offerings across Europe before turning its attention to a mobile advertising product.
"Mobile is very important to us. The question is whether we can make the right play in that space through one of our internal platforms, and do it organically, or whether we will need to get acquisitive," Vanderhook said, adding that the firm will seek to raise capital through an IPO at some point in 2011 if the financial climate allows. "The reality is, it takes a lot of capital to be an independent player in this space," he explained.
In the display ad space, Specific Media's data collection and behavioral ad targeting practices have attracted criticism from privacy advocates and scrutiny from legislators for a number of years. In August, the company was implicated in a lawsuit regarding its alleged use of Flash cookies to "re-spawn" HTML cookies for ad targeting, a practice the plaintiffs argue essentially removes users' ability to control the way their data is being used.
Vanderhook dismissed the suit as "ill-advised," arguing the company does not use Flash cookies for ad targeting purposes, and that the Network Advertising Initiative (NAI) has now effectively outlawed the practice completely. He conceded, however, that it has in the past used Flash cookies to re-spawn HTML cookies for purposes such as ad frequency capping.
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Jack Marshall was a staff writer and stats editor for ClickZ News from 2007 until August 2011.
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