Yahoo announced a deal to acquire BrightRoll, a programmatic video-advertising platform, for $640 million in cash.
The deal will combine Yahoo’s desktop and mobile video advertising inventory with BrightRoll’s platform and publisher relationships. BrightRoll’s net revenue is expected to exceed $100 million this year, and Yahoo said it expects the transaction to enhance its profitability.
Advertising technology is an area Yahoo has lagged, and analysts had suggested that both video and ad tech were areas Yahoo should beef up after it raked in several billion dollars from the Alibaba Group initial public offering.
“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,” Yahoo CEO Marissa Mayer said in announcing the deal. “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.”
Mayer added, “As with every acquisition, we have been extremely thoughtful about our approach to the video advertising space.”
The deal is expected to close in the first quarter of 2015, subject to various closing conditions. BrightRoll will continue to offer its current suite of products and services, according to the companies, with Yahoo’s additional investment and global support to improve and expand those offerings. BrightRoll will retain its 400 employees.
BrightRoll’s advertising network aggregates inventory form publishers and its “programmatic” advertising model allows real-time buying on a large set of online-video advertising.
With the BrightRoll acquisition, Yahoo will move up in comScore’s video-ad inventory rankings from 12th to fifth place, Wells Fargo analyst Peter Stabler wrote in a note. That would still leave Yahoo behind Google/YouTube, Facebook, SpotXchange and AOL.
“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,” BrightRoll CEO and founder Tod Sacerdoti said in a statement. “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.”