Tremor Media Ties Up With ScanScout

Were you wondering what Tremor Media was going to do with that giant $40 million funding round it raised earlier this year? Well now you know: it was planning to make an acquisition. The online video startup announced that it has acquired rival ScanScout in a deal that will make it the second-largest online video ad server in the U.S.

The deal will give Tremor some pretty substantial scale in a market segment that thrives on it; according to comScore, Tremor and ScanScout together served 667.5 million video ads in September. That was second only to Hulu, which served 794 million ads during the same month, and well ahead of (now) No. 3 video ad server BrightRoll, which delivered 476.4 million ads in September. Google, (s GOOG) meanwhile, served up just 242.5 million in-stream ads during the month.

But it’s not just about reaching scale, as the acquisition will combine the technology platforms that both have built. Tremor’s Acudeo ad management platform allows publishers to set rules around which ads are served against their videos, in an effort to help improve monetization of their video assets. Meanwhile, ScanScout provides interactive ads through its SE2 video ad technologies. The combination of both companies will also provide improved targeting for advertisers.

The deal comes as consolidation has begun picking up in the ad serving business; AOL (s AOL) acquired video syndication and monetization firm 5min a few weeks ago, while Specific Media acquired BBE. And Undertone Networks announced that it has acquired Jambo Media this morning. But all those deals were about adding video inventory and expertise to already robust display ad businesses.

Tremor has raised $80 million through four rounds of funding, and is expected to post revenues this year of $70 million to $75 million by itself, according to AdAge, which first reported the deal. Meanwhile, it said that ScanScout has revenue of about $20 to $25 million, after raising $17.5 million. ScanScout CEO Bill Day will take the reigns of the company as chief executive, with Tremor CEO Jason Glickman becoming executive chairman of the combined firm.

Related content on GigaOM Pro: (subscription required)