Yahoo buys BrightRoll for $640m in video ad push

12/11/2014

Yahoo has bought BrightRoll, giving the online media giant a programmatic video advertising platform as the firm continues its push for more ad dollars to compete with Google and Facebook.

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The deal will see Yahoo’s premium desktop and mobile video advertising inventory integrated with BrightRoll’s programmatic video platform and publisher relationships.

BrightRoll, one of Yahoo’s biggest deals under CEO Marissa Mayer, is profitable and should exceed $100 million in revenue this year, the Web portal said yesterday in a statement.

Yahoo expects the purchase, which is subject to customary closing conditions, to boost earnings before certain items.

The acquisition would help bolster Yahoo’s position in a growing part of the digital-advertising market.

“Video, along with mobile, social, and native, is driving a surge in digital advertising. Here at Yahoo, video is one of the largest growth opportunities, and BrightRoll is a terrific, strategic and financially compelling fit for our video advertising business,” said Marissa Mayer, Yahoo CEO.

"As with every acquisition, we have been extremely thoughtful about our approach to the video advertising space. This acquisition will accelerate the growth of both companies – we can help BrightRoll scale to even more advertisers globally and they can bring their tremendous platform offering to Yahoo’s advertisers. The combination builds positive momentum for Yahoo’s broader display advertising business in 2015.”

Revenue from online video ads may surge 56 percent this year in the U.S. to $5.96 billion, according to researcher EMarketer Inc. Yahoo will have just 2.4 percent of the worldwide market for all digital ads this year, lagging behind Google and Facebook.

San Francisco-based BrightRoll serves many of the largest brands and agencies, including 87 of the AdAge Top 100 U.S. advertisers, according to the statement.

It specialises in what’s called programmatic advertising, which helps automate the buying of ads. EMarketer estimates that the market for programmatic video ads in the U.S. will rise to $3.84 billion by 2016 from $710 million this year.

“We believe the next step for programmatic video advertising as an industry is to extend and standardize globally, make cross-device buying simple and measurable, and complement and integrate with TV,” said Tod Sacerdoti, BrightRoll CEO and Founder. “We are excited to join Yahoo to materially advance efforts in each of these areas. We’re still in the early innings as an industry, and together, BrightRoll and Yahoo are committed to the vision of helping grow the entire video advertising ecosystem.”

Last month, Yahoo had reported that its third quarter revenue from ads fell by 5% from a year earlier. It has struggled to keep up with rivals like Google that have seen ad revenue grow by 17% in third quarter from a year ago.

The acquisition is also Yahoo's first major purchase since receiving $9.4bn in September from selling part of its stake in Chinese e-commerce giant Alibaba.

News of the takeover comes after reports in October that said Yahoo was close to investing millions of dollars in mobile messaging startup Snapchat.

Analysis: 'No. 1 for video ad reach in the US'

Rami Brusilovsky, Director of Video Advertising at cross-channel ad platform dmg, said: "The acquisition of Brightroll by Yahoo has been on the cards for a while. Brightroll were one of the last big independent video companies after AOL bought ADAP.TV and Facebook bought Liverail. Yahoo is sending a very powerful message to the market. By announcing this acquisition Yahoo is making a statement that it is much more than Alibaba and that it is sticking to its roots in online advertising.

"Even though Google is the one to beat in relation to video content views, Brightroll is the number one for video ad reach in the US. By buying Brightroll, Yahoo has in a stroke created a huge video footprint and a competitive edge over Google.

"For the wider video industry, this latest acquisition raises the bar for people trying to enter this industry. As video is almost 100% brand money, I believe the landscape will soon look a lot leaner with only the big guys and a few medium-sized players left. Medium-sized companies will need to up the ante and deliver true business and tech added value to survive and get a decent share of the market."

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