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Deja Vu as Yahoo take on AOL with new $640 million acquisition

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It would appear that Yahoo are looking to beat AOL at their own game (welcome back to the late 90's!) with the $640 million acquisition of programmatic video-advertising platform BrightRoll. The deal, which is expected to close early next year, seeks to elevate Yahoo's video-advertising platform, making it the largest in the US. The acquisition has been seen as a way for the multinational internet corporation to counter AOL's purchase of Adap.tv last year, which has dramatically increased their advertising revenue. It will also make Yahoo a more credible player in the advertising technology field. Yahoo has said that BrightRoll currently has 87 of the top 100 US advertisers on its books and is expected to have a revenue of over $100 million this year.

BrightRoll Technology

The deal was made possible due to the $6.3 billion Yahoo recently landed due to its sale of shares in the Chinese e-commerce company Alibaba. According to Yahoo, half of that money will be returned to shareholders, and if this recent acquisition is anything to go by, it will using the other half to make some serious, larger acquisitions. BrightRoll will retain its 400 strong workforce, but has been signing up new leaders and advertisers in preparation for the move. The deal could prove risky for Yahoo though, as analysts believe BrightRoll has had problems keeping the quality of its ads in check. AOL faced a similar problem with Adap.tv, and are currently making efforts to fix it. Still, programmatic video advertising is a boom sector, which is expected to reach $710 million in 2014, and is predicted to increase to $3.84 billion by 2016, representing 40% of all digital video advertising dollars.

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The deal was made possible due to the $6.3 billion Yahoo recently landed due to its sale of shares in the Chinese e-commerce company Alibaba

Any potential drawbacks to the deal appear to have completely bypassed Yahoo CEO Marissa Mayer, who is doubling down on her plan to buy more companies, and invest in talent and emerging areas of technology such as mobile. She called the acquisition plan less of a choice and more of a necessity, underlining how Tumblr, which Yahoo bought last year for over $1 billion, is expected to generate more than $100 million in revenue next year. It would appear she's really planning for the future. Mobile ads, meanwhile, accounted for more than $200 million in sales in the third-quarter, which is around 17% of the company's total revenue.

Marissa Mayer's 3 biggest decisions as Yahoo CEO

Meyer calls the acquisition an “Important step” in Yahoo's transformation strategy, and is full of praise regarding the platform. She said “BrightRoll is a large, growing and profitable business,” and adds that she is friendly with founder and CEO Tod Sacerdoti and cannot wait for “Him, his vision, and his team” to join Yahoo. Yahoo are not putting all their eggs into one basket either. As well as expanding their stock in video-advertising, they have also spent a great deal of money and effort on their Yahoo Screen service, which recently caught itself quite a coup in the shape of the critically acclaimed sitcom “Community,” which NBC cancelled earlier this year. As to where Yahoo will spend the rest of their Alibaba windfall? We can but speculate, though I wouldn't count out a few more large acquisitions in the near future.

Benjamin Hiorns is a freelance writer and struggling musician from Kidderminster in the UK. As a hopeless fan, he will be forever in Yahoo's debt for saving Community!

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