Adobe (NSDQ: ADBE) is continuing to build its advertising business through major acquisitions and this time, it’s buying Auditude, which operates a platform for managing online video ads. Terms of the deal, Adobe’s third since buying online analytics firm Omniture (NSDQ: OMTR) for $1.8 billion two years ago, weren’t disclosed.
It’s been noted many times that online video is the fastest growing segment of internet advertising. This year, U.S. online video advertising revenues of around $2 billion, eMarketer says, while the total online ad market will be about $30 billion. Video is attractive to advertisers for obvious reasons: it tends to command more attention than text or audio alone, and therefore provides the kinds of engagement metrics that brand marketers value.
But video advertising’s rise, which has been gathering speed since the depths of the 2009 ad recession thanks to the growing penetration of broadband connections in general, is not growing unimpeded. For one thing, media buyers still complain of the lack of premium inventory as well as the lack of easily comparable measurements.
For example, there’s a debate about whether Gross Ratings Points are best for online video measurements; GRPs are the standard metric for TV. Advertisers and media buyers are familiar with GRPs, which is part of that appeal. But others feel that more usual methods of online measurement, such as calculating engagement — such as how many people watched most of a video or clicked a link within the ad — are the best way to determine effectiveness, and in turn, how much to spend on a web video.
This past summer, Auditude, which has raised
nearly $40 million about $32 million in the past four years, scored a major coup when Major League Baseball Advanced Media, the interactive web arm of the sports, chose it to build a rich media ad serving platform for inserting live ads. The MLBAM is betting heavily on video ads as a substantial revenue for its growing online and mobile efforts.
The company’s track record of landing other large video publishers, as well as its flexibility to work on most devices, led Adobe to make the acquisition. “Adobe can now offer an unparalleled platform for authoring, distributing, analyzing and monetizing digital video experiences everywhere – simplifying workflows, increasing consumer engagement, delivering insights and driving increased revenue for content publishers,” said David Wadhwani, senior vice president and general manager, Digital Media Business Unit, Adobe, in a statement.
Auditude’s advertising server platform will be joined with Adobe’s own video technologies. Adobe also plans to fit Auditude’s offerings into its Adobe Digital Marketing Suite, which provides analytics and ad optimization services. The tools help marketers decide on a content delivery strategy and ad placements.
The acquisition follows very closely to the previous two deals Adobe did. In addition to Omniture, the company bought audience data management company Demdex in January. The common denominator in all these deals was “data and ROI,” the two main things that drive the majority of online ads. And they’re also the two essentials of unlocking still greater online video ad spending.
There’s an expectation that with so many data providers rising through the online ad space, there will have to be a consolidation taking place, especially with the economy to remain volatile and uncertain through the next year. Other online video platforms — and there are many — will be looking at this deal closely and will likely accelerate plans to take on more funding, sell themselves or look to partner with others over the next few months.