In a move to expand its video advertising leadership, AOL is acquiring Adap.tv -- paying $405 million for the programmatic video advertising platform, which counts some of the world's largest brands, agencies, and publishers as customers.
To be sure, Adap.tv is one of the fastest growing platforms on the Internet. The company's global revenue has spiked more than 100 percent per year in each of the last three years and the brand has attracted 83 of the Ad Age 100 and 70 of the comScore 100. In 2012, Adap.tv supported more than 26,000 global ad campaigns, which ran on approximately 9,500 Web sites.
By acquiring Adap.tv, AOL can leverage a global programmatic video technology stack for publishers and advertisers across all screens and a unified yield management platform for advertisers and publishers for planning, targeting, ad serving and measurement. AOL also acquires Adap.tv talent in the deal.
AOL's Big Video Opportunity
"The Adap.tv founders and team are on a mission to make advertising as easy as e-commerce and the two companies together will aggressively pursue that vision," said Tim Armstrong, chairman and CEO of AOL. "Two trends are prevalent in the video space right now -- the movement from linear television to online video and the shift from manual transactions to programmatic media buying. Adap.tv is positioned squarely in front of the huge opportunity these trends are presenting."
AOL has invested heavily in the digital video space by focusing solely on premium content and premium publishers. This investment has propelled the AOL On Network to second place in monthly content video views in the U.S. for nine of the last 12 months, according to comScore.
AOL can soon boast an end-to-end solution and video stack for publishers and advertisers -- from premium original production to content aggregation and syndication platforms, robust video CMS technology, and now a leading programmatic video platform. Amir Ashkenazi, CEO of Adap.tv, believes "most TV advertising will soon be traded programmatically on platforms like ours." If he's right, AOL could be positioned for strong growth on this front.
Will it Pay Off?
We caught up with Greg Sterling, principal analyst at Sterling Market Intelligence, to get his take on how this acquisition could impact AOL's chances in the video advertising segment. He told us this deal is very much like AOL's early acquisition of Advertising.com in the online display market.
"Video advertising is a significant and growing area for digital advertising, including in mobile," he said. "It has the potential to be very significant for AOL, which has been searching for a way back to relevance for advertisers and users. On the brand advertising side this may well be it. I also suspect the price tag, $405 million, may have been raised by multiple parties competing for Adap.tv."
Adap.tv will operate independently as part of AOL's video organization, which is led by Ran Harnevo, senior vice president, and be included as part of the overall solution offered by AOL Networks to its publisher and advertiser partners. AOL Networks, under the leadership of recently named CEO Bob Lord, partners with leading publishers, advertisers and agencies seeking to maximize the value of their online investments. AOL Networks brands include Advertising.com, the AOL On Network, Be On, ADTECH and Pictela.