Yahoo! Inc agreed to acquire the automated advertising service BrightRoll, boosting its presence in the video-ad real-time market.
The internet portal announced it would pay around $640 million to purchase the start-up company. This would be the second-largest acquisition since Marissa Mayer became CEO two years ago.
The deal would bolster Yahoo!s advertising power and potentially help catch up to rivals like Google and AOL. Analysts at eMarketer Inc. projected that the online video advertising segment will grow 56% to $5.96 billion this year in the U.S. The agreement will also give Yahoo! a 2.4% share of the worldwide digital ads market.
“Video, along with mobile, social, and native, is driving a surge in digital advertising,” Ms. Mayer said. “BrightRoll is a terrific, strategic and financially compelling fit for our video advertising business.”
The CEO pointed out that BrightRoll is profitable and expects full-year revenue of $100 million. The acquisition will turn Yahoos video advertising platform into the largest in the United States, and with it the company hopes to offset declining internet ad prices and decelerating growth.
Scott Burke, the vice president of Yahoo!s advertising platforms said the company will continue to look for acquisitions in an effort to return to “growth in our display business in 2015, that’s the number one focus for us.”
The BrightRoll deal is valued about half of Ms. Mayer’s largest acquisition last year, when the CEO spent $1.1 billion to purchase Tumblr, the blogging platform.
The deal follows the acquisition of Adap.tv by AOL last year, where the company spent more than $400 million to increase its ad performance. However, Youtube dominates the segment with an 18.9% share, according to eMarketer Inc.
San Francisco-based BrightRoll services many of the largest brands and agencies, including 87 of the AdAge Top 100 U.S. advertisers. The start-up company specializes in programmatic advertising, automatization of ads purchases. According to eMarketer, the U.S. market for programmatic advertising will rise to $3.84 billion by 2016 from $710 million this year.
After the deal is closed in the first quarter of next year, BrightRoll will not make any changes to its 400-employee structure and Tod Sacerdoti, CEO and founder, will take the wheel of Yahoo!s video ad efforts.
Yahoo! Inc lost 0.73% on Tuesday to close at $49.05 on the NASDAQ, but traded 1.55% higher at $49.81 at 14:38 GMT on Wednesday. The company is valued at $46.47 billion. According to CNN Money, the 33 analysts offering 12-month price forecasts for Yahoo! Inc have a median target of $49.00, with a high estimate of $63.00 and a low estimate of $38.00. The median estimate represents a 0.10% decrease from the previous close of $49.05.
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