BrightRoll Bought By Yahoo! For $640 Million

Yahoo! is acquiring video advertising company BrightRoll for a reported price tag of $640 million in cash. This move is being seen as an attempt to help Yahoo’s falling ad revenues, and make the company competitive with Google and Facebook.

BrightRoll founder and CEO Todd Sacerdoti announced the acquisition on the BrightRoll blog.

“Today, I’m thrilled to announce that BrightRoll has reached a definitive agreement to be acquired by Yahoo. We have seen Yahoo’s significant commitment to technology excellence, to execution for advertisers and publishers, and to building a world class team. We are excited to take the next step with our customers and partners to accelerate the growth of the video advertising ecosystem.”

According to emarketer, Yahoo!, which was once the leader in online ad revenue, will fall to fourth by the end of this year. As of July, Yahoo!’s 3 percent of online ad revenue was behind Google (32 percent), and Facebook (6 percent). Microsoft is projected to pass Yahoo for third.

Yahoo CEO Marissa Mayer commented on the BrightRoll acquisition in a statement.

“BrightRoll is a terrific, strategic and financially compelling fit for our video-advertising business. This acquisition will accelerate the growth of both companies – we can help BrightRoll scale to even more advertisers globally and they can bring their tremendous platform offering to Yahoo’s advertisers.”

Mayer became Yahoo! CEO in July of 2012, and with the BrightRoll purchase, Yahoo!has spent $1.6 billion on acquisitions since she took charge of the company. According to marketing news site ClickZ, the cash for the BrightRoll deal came from Yahoo!’s sale of its stake in Alibaba, a Chinese ecommerce company. The Inquisitrreported in September that Yahoo! would realize a windfall from its connection to Alibaba. Yahoo!’s sale of its stake in Alibaba netted the company about $6.3 billion.

BrightRoll, based in San Francisco, is projected to end 2014 with net revenues in excess of $100 million. ClickZ says that the BrightRoll platform is ranked number one in video ad reach. comScore reported in August that BrightRoll ads reached 51.3 percent of the U.S. population that month.

The BrightRoll acquisition is getting positive reviews on Wall Street. According to The Street, Brian Wieser, of Pivotal Research Group, said.

“BrightRoll is emblematic of the kind of acquisition Yahoo should pursue, given the traction it has within the industry and the alignment it has with the priorities of large advertisers.”

Ronald Josey, from JMP Securities, agrees.

“We view BrightRoll as a strategic acquisition for Yahoo! that could accelerate Yahoo!’s video monetization strategy given BrightRoll’s robust programmatic tools.”

Investors appear happy with the BrightRoll acquisition, at least so far. Yahoo! shares fell by about 1 percent on Tuesday, and did not rebound in after hours trading, following the BrightRoll announcement. But by midday on Wednesday, Yahoo! was trading at over $50 a share, up about 2.5 percent. Both Yahoo! and investors seem to agree that BrightRoll is going to be a boost for Yahoo! advertising.