POV: Yahoo acquires Brightroll
Mindshare Point of View: Yahoo has acquired BrightRoll, a programmatic video advertising platform for a reported $640m. The deal will combine Yahoo’s premium desktop and mobile video advertising inventory with BrightRoll’s programmatic video platform and publisher relationships. BrightRoll has net revenues expected to exceed $100 million this year.
Details and Implications
Yahoo is trying to return its display advertising revenue back to growth for the first time in two years, and this acquisition adds BrightRoll’s expertise in video programmatic advertising, and area Yahoo claims is fundamental to its future. Yahoo's senior VP-advertising technology Scott Burke said: "Yahoo has had a successful video owned-and-operated business, but we have not built out our off-network and third-party and platform business in video.”
For marketers, the deal will simply give them a scaled and brand safe destination to move more of their TV spend to pre-roll online video ad formats. It will also create more competition and much-needed inventory, which will hopefully keep some of historical pricing anomalies in the online video space in check.
In terms of the $640m acquisition cost, the price tag makes sense given the current industry momentum behind programmatic and online video. eMarketer estimates that programmatic could make up 63% of total US display advertising by 2016, of which 70% will be mobile, 60% will be premium or direct, and 18% will be video. The deal will certainly accelerate Yahoo’s programmatic growth ambitions in at least two of those areas. However, the acquisition has a less certain impact on mobile advertising revenues as BrightRoll is weaker in this area, although Mayer will certainly seek to rapidly bolster its capabilities.
More than anything else the BrightRoll acquisition is another signal from Marissa Mayer that Yahoo simply doesn’t have the time or resources to organically catch-up to its competition and find its way back to growth. In short, Yahoo will need to acquire, which it has been relentlessly doing since Mayer took control, including mobile ad network Flurry and social network Tumblr. Fortunately for Mayer, Yahoo does have cash to spend to fund this strategy after the offloading of some of its shares in Chinese giant Alibaba.com during its IPO earlier this year (netting $8.3bn in the process – even though had Yahoo waited until trading began it would have netted $3bn more for the same shares).
The BrightRoll acquisition may just be the start of a renewed and significantly larger spending spree by the long time Internet giant. With Yahoo’s owned advertising inventory continuing to decline, Mayer may be looking to build out a strong mobile programmatic Yahoo network consisting of a portfolio of newly owned but non-Yahoo branded assets as well as third party inventory. Yahoo may even make a much bolder move by acquiring or merging with a suddenly struggling Twitter or make a deal with some of the highly successful Chinese Internet giants seeking to expand elsewhere. Armed with a hefty war chest, Yahoo may be a very different company in a year’s time.