AOL is to spend $405 million buying video marketplace platform Adap.tv to strengthen its position in the online video advertising space.
The multinational media giant posted stronger-than-expected quarterly earnings on 7 August. It said that, for the three months to June, revenues rose 2% compared to the same quarter last year, to $541.3 million. Earnings per share were 35 cents.
AOL chairman and CEO Tim Armstrong said the results represented “a major step forward”. Its agreement to acquire Adap.tv “will make AOL a clear global leader in the most important growth segment in our industry – online video.
“AOL continued to get leaner during Q2 while growing consumer traffic, growing all advertising revenue lines, and improving our subscription trends.”
Armstrong added: “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.”
Adap.tv’s platform and team had enabled its rapid expansion, AOL said, resulting in a growing customer base of publishers and advertisers. Last year, Adap.tv supported more than 26,000 global ad campaigns on around 9,500 websites, and was used by many top brand advertisers.
Adap.tv CEO Amir Ashkenzai said: “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.”
AOL, one of the early giants of the web, which today serves just under 3 million US subscribers, has reinvented itself as a branding and online advertising company under Armstrong. In 2011 it bought the Huffington Post for $315 million.
The acquisition of Silicon Valley-based Adap.tv will consist of $322 million in cash and $83 million in stock, the company said. The business employs more than 200 people.
Adap.tv will operate independently as part of AOL’s video business. It expects to complete the purchase in the third quarter of 2013.