Yahoo has acquired programmatic video advertising platform BrightRoll for approximately $640 million in cash.
The acquisition marks Yahoo’s first major purchase since its $6.3 billion win in September when it sold its stake in Chinese e-commerce service Alibaba.
BrightRoll, a San Francisco-based company that helps marketers place online video ads, is expected to end the year with net revenues of more than $100 million. The platform has been ranked number one in video ad reach, serving ads to 51.3 percent of the total U.S. population in August of this year, according to comScore Video Metrix.
With its intensive partnerships with publishers and measurement companies, BrightRoll is likely to become another revenue stream for Yahoo, says Josh Feuer, chief product officer (CPO) and co-founder of Genesis Media, an online video technology company.
“BrightRoll is a nice plug-and-play solution for Yahoo,” he says. “With extensive publisher relationships and heavy investment in programmatic technology over the past few years, BrightRoll can be Yahoo’s strategic video ad-tech partner with the opportunity to further scale.”
It seems that Yahoo is taking the same approach as AOL to claim leadership in the programmatic video space. In September of last year, AOL purchased global programmatic video advertising platform Adapt.tv for $405 million. AOL said in its quarterly report that its third-party platform revenue grew approximately 22 percent in the first six months of this year, which was primarily from Adapt.tv. If the same rule applies, BrightRoll is likely to boost Yahoo’s business performance as well.
“For Yahoo to remain relevant in the ad-tech market, it needs to take a bet with one of the remaining video ad networks,” says Feuer, referring to Tremor, Yume, TubeMogul, Spot X, and BrightRoll. “AOL made its bet with Adap.tv and, yes, Yahoo is betting on BrightRoll to fill its need for video ad technology. This is a clear sign that Yahoo is going to step into video in a big way with continued investment and scale in the BrightRoll programmatic exchange.”
In addition to Yahoo and AOL, Facebook acquired LiveRail in July of last year, less than a month after Google unveiled its premium programmatic video marketplace.
“These big companies are increasingly relying on technology to streamline the buying process,” Feuer notes. “They are realizing that a single centralized buying system for reporting and campaign management is vital if they are going to compete.”
Looking at the larger picture, these movements will add transparency and efficiency to the whole digital marketing ecosystem, and help solve problems like ad fraud, Feuer adds. “They will increase transparency of media spend and ROI via real-time reporting systems that are centralized and standardized across the video landscape,” he explains.
But it’s still too early to tell if it’s a smart acquisition. eMarketer predicts that Yahoo’s share of the digital marketing market worldwide will shrink from 2.86 percent to 2.52 percent this year. In comparison, Google will continue its robust growth and represent 31.45 percent of net digital ad revenue worldwide, followed by Facebook and Microsoft.
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