2013 8 13 mindshare digital pov aol buys video exchange adap.tv

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2013 8 13 mindshare digital pov aol buys video exchange adap.tv

  1. 1. AOL Buys Video Exchange Adap.tv Eridani Baker 13/08/2013 Background 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. Implications/details 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 and CEO. 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. Summary 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.

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