2013 8 13 mindshare digital pov aol buys video exchange adap.tvDocument Transcript
AOL Buys Video
Eridani Baker 13/08/2013
AOL has acquired video ad
exchange Adap.tv for $405 million
($322 million in cash and $83
million in AOL common stock).
Adap.tv is a platform that allows
advertisers to buy, sell and serve
web, mobile and connected TV
video ads in real time, in a similar
way that display inventory is bought
on a Real Time Bidding (RTB) model.
The move is widely seen as an
attempt to better compete with
market leader Google.
The deal marks long overdue consolidation of the sector, which has been notoriously cluttered and
fragmented. Given Adap.tv’s existing relationship with top level publishers and advertisers, the deal
will likely ‘double’ AOL’s overall volume and revenue, according to Tim Armstrong, AOL’s chairman
The acquisition was announced alongside AOL’s second quarter earnings report, which noted that
the company surpassed Wall Street estimates on earnings per share and revenue during the period.
The acquisition reflects AOL’s bid to strengthen its offering in two of the fastest growing ad
sectors: online video advertising and programmatic ad buying. Adap.tv allows advertisers to buy
large amounts of highly targeted video advertising using programmatic buying. Whilst this isn’t
unique to AOL, it is not yet a standard offering in the premium content environment.
A shift of dollars from broadcast TV has been a noted trend since we all began time shifting our
viewing over ten years ago. AOL is hoping to capture that shifting revenue. In the US digital video
advertising is expected to increase 41% year on year in 2013, while programmatic ad buying is
expected to climb 73% in the same period.
The acquisition strengthens AOL’s offering but unless media deals included large volumes of AOL
video inventory bought through Adap.tv, then it does not change the planning and buying process
hugely. It also doesn’t solve the attribution issues surrounding online video as video analytics will
be held on the publisher side and run through a different ad server, making overall reach and
frequency figures impossible to pin point. The same problem is true of Google’s offering.
This purchase is a visible sign of an overall industry shift from premium-to-programmatic strategy
for online video. Premium placements are likely to always exist and are likely continue to make up
the majority of annual revenue, however, with the addition of video bought using RTB, AOL is now
strongly positioned with a multi-screen and end-to-end (inventory to analytics) offering that makes
it a stronger contender in the global marketplace.