Yahoo has revealed it is to acquire programmatic video ad platform BrightRoll for $640m (£402m), in a deal expected to be completed in 2015.
The all-cash deal, revealed by Yahoo chief executive Marissa Mayer in a blog post, will unite the publisher’s desktop and mobile video ad inventory with Brightroll’s programmatic video platform and publisher relationships.
Mayer said the acquisition marks an "important step" in its transformation strategy and will "dramatically strengthen" Yahoo’s video advertising platform, making it the largest in the US.
"BrightRoll is a large, growing and profitable business with net revenues expected to exceed $100m this year. I’ve spent time with Tod Sacerdoti and his leadership team and I cannot wait to have him, his vision, and his team here at Yahoo.
"I’ve talked on our earnings call about the transformation to return our iconic company to greatness. This acquisition is an important step in that transformation and has been accomplished in a strategically and financially compelling way. I’m confident it will create shareholder value, especially since we expect it to enhance EBITDA," she said.
She added that the ongoing fragmentation of online video advertising has prompted advertisers to seek ways to buyt online video inventory at scale, across many sites but in fewer, simpler transactions.
US digital video advertising will total $5.96bn this year, and is expected to more than double to $12.82bn by 2018, according to eMarketer.
Programmatic video advertising in the US will reach $710m in 2014, and is predicted to increase to $3.84bn by 2016, representing 40 per cent of all digital video advertising dollars, according to eMarketer.
Meanwhile Yahoo's share of the $43.1bon US digital advertising market dropped to 5.8 per cent in 2013, and this year, its share will drop further to 4.9 per cent of the $50.73bn US digital ad market (source: eMarketer).