Today’s Burning Question: AOL’s Acquisition Of Adap.tv

0
30

ADOTAS — Having been rumored for months to be headed toward an IPO, Adap.tv was instead acquired today by AOL.

“AOL is a leader in online video and the combination of AOL and Adap.tv  will create the leading video platform in the industry,” said Tim Armstrong (pictured, below right), Chairman and Chief Executive Officer of AOL, in apress release announcing the move. “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.

“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,” said Armstrong.

“At Adap.tv, we are focused on building the most important business  within the most important category in digital advertising,” said Amir Ashkenazi (pictured, above left), CEO, Adap.tv, in the same release. “We believe that most TV advertising will soon be traded programmatically on platforms like ours. The combination of  AOL and Adap.tv accelerates our vision of efficient and effective TV and video advertising.”

In Today’s Burning Question, we asked industry leaders for their reaction to the move. Here’s how they responded:

“AOL’s acquisition of Adap.tv is a big bet but also a sound strategic move based on recent and projected growth trends for digital video. According to the IAB, digital video as a percent of total online advertising grew steadily from 2006 – 2012 and accounted for 6% or $2.3 billion of online ad revenues in 2012. Facebook is also aggressively moving into the video ad space. According to a recent Bloomberg article, Facebook now draws more young prime-time viewers than the major networks and plans to sell its own TV-style ads for as much as $2.5 million per day. As all advertising results become increasingly measurable, we’ll be watching closely to see how brands and agencies integrate performance-based models to the rapidly growing video advertising vertical.” — Malcolm Cowley, CEO ofPerformance Horizon Group.

“This acquisition makes a ton of sense for AOL and Adap.tv and I congratulate them both. Adap.tv has built an integrated stack of supply and demand side technologies that span the programmatic and RTB video supply chain. This fits very neatly into AOL’s strategy to be a leader in programmatic and video, giving them a number of key ingredients, particularly on the supply side with Adap.tv’s yield and marketplace tools. I would also commend Adap.tv and their investors on the timing and avoiding an IPO. I believe that Adap.tv would have started to find it difficult to compete against numerous other well-funded and more focused combatants across both the supply (SSP, yield, video ad server, exchange, marketplace) and demand (DSP, ad server, campaign management) side of the marketing cloud.” – Andrew Bloom, SVP of Strategic Business Development at DG.

“First of all, congratulations are due to Amir and Teg [Grenager, Founder and Chief Product Officer at Adap.tv]. They are incredible, world class entrepreneurs that saw the coming convergence of television with the Internet many, many years ago. With that foresight and an entrepreneurial drive to execute, they built one of the biggest and most important companies in the online video industry. It’s been a long road, but today’s outcome is recognition of their years of hard work, dedication, commitment and vision. Most importantly though, this is also recognition of the critical position that video is now occupying for both online audiences and marketers. AOL has made a significant bet that video will become the dominant driver of brand advertising online. This acquisition enables them to compete effectively for brand dollars by combining their growing investment in original video content via the AOL On Network, with a leading technology stack that embeds them into the daily workflows of major trading desks and advertisers. We are still in the infancy of the online video market, and I firmly believe the time will ultimately come when Television itself becomes a digital medium. At that point this may prove to be one of the wisest acquisitions AOL ever made.” – Mark Trefgarne, CEO, LiveRail.

“Good move by AOL to extend their reach and offer programmatic options to agencies. This further consolidates video inventory into the hands of a few like Google, Yahoo, Hulu, etc. With Facebook entering the market for video ads, this also strengthens AOL’s video position in the market.” — Jivox CEO Diaz Nesamoney.

“AOL’s acquisition of Adapt.tv is definitely smart. It also shows the importance of digital video within the digital advertising marketplace. Every stat points to the increase in digital video consumption on both desktop and mobile devices. And, the acquisition price is not surprising and is in the filing range of Tremor and YuMe’s. The acquisition completes AOL’s video tech stack – premium video content (Huffington, etc.), syndication (5Min), and now digital video programmatic buying platform (Adapt.tv). Other large traditional publishers should take notice – Meredith, Time Inc., Conde Nast, etc. The time to evolve into content combined with ad technology is now. Finally, digital video consolidation is a positive for the industry. Advanced premium and niche technologies can plug into and leverage a few tent-pole video networks.” – Jack Cohen Martin, COO and Co-founder of Dynamix.

“AOL’s purchase of Adap.tv is squarely where it needs to be investing. NMM recently found that 35% of American Adults are ‘Multi-Screen Viewers’ and 26% consider themselves to be ‘Cord Cutters’ … and these statistics include ages 18-64. For the next wave of viewers 18-to-24-year-olds these stats are much more drastic with almost 50% of 18-24 year olds being ‘Multi-Screen Viewers’ and traditional TV becoming a less attaching and engaging platform. 32.5% of 18-to-24-year-olds consider themselves ‘Cord Cutters’ (that is not needing to pay for Cable TV to acquire the content they desire). There is no longer just market growth in online video viewing; it is a ‘movement – a major shift in how video is and will be viewed. Year-over-Year growth of online/tablet viewing is staggering. I believe we have hit the tipping point.” – Gary Reisman, CEO, Co-Founder of NewMediaMetrics.

“AOL’s acquisition of Adapt.tv is tremendous validation for the digital video space and the growing trend towards programmatic media. Congratulations to both companies on the exciting news! Having a major player like AOL go all in on video demonstrates what we’ve known for sometime – video will be the top driver of growth for the online advertising industry. It will be interesting to watch the two companies integrate, as with any full stack solution the challenge is always trying to equitably serve both the buy and sell side. Ultimately, publishers will want to know that their SSP is maximizing their revenues by offering the greatest amount of demand, transparency, and innovation possible. Can this be achieved with AOL’s interests in servicing its O&O properties? And will DSPs feel further threatened by this larger competitor on the buy side? It’s great to see a bold move by a large industry player. Net-net, we expect to see more major companies jump into the digital video pool and look forward to what the coming years will hold for our industry. SpotXchange CEO Mike Shehan.

“At $405M, this is the biggest acquisition made by Tim Armstrong (bigger than Huffington Post). The deal is strategic and significant for multiple reasons:

  • Most other acquisitions AOL has made under Tim have been around Content/Video.   With these acquisitions, AOL has become one of the largest “Publishers” (creators/aggregators) of on-line video, especially in the verticals it focuses on (Lifestyle, Tech, etc.).
  • This is a “Platform” acquisition, while will allow AOL to better monetize the content and consumers it has.   Adap.TV is a technology company that has a programmatic ad sales engine which mines the data and leverages it to optimize which ads are displayed against which content, thereby maximizing the effectiveness and therefore the revenue.
  • This allows AOL to put a very strong Video and Video Tech stack against Google (which has YouTube and DoubleClick).
  • This is also a great exit for Adap.TV, as the Video-Tech/Ad-Tech IPOs haven’t done that well recently (Tremor and YuMe).
  • The deal says volumes about the future of video generally and video advertising in particular. It also underscores the key role that AOL intends to play in helping shape the future.

“This is another example of how brilliantly Tim Armstrong has evolved AOL into an end-to-end Video company. AOL announced its quarterly results on Wednesday. EPS were 35 cents, which was 2 cents higher than analysts had predicted. Its overall revenue was up 2 percent from a year ago. This shows that AOL has had a solid growth in its ad network unit and publishing properties. It also showed that AOL’s publishing business is approaching profitability.” — Mediamorph Co-Founder/Chairman Shahid Khan.

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here