Michael Barrett, CEO Magnite.
The magnet
Advertising technology player Magnite is acquiring SpotX, a connected TV (CTV) and video advertising platform, for $ 1.17 billion in cash and stock, the companies announced on Friday.
Magnit shares rose by more than 25% after the announcement of the transaction. Magnite helps publishers of websites, applications, CTV channels or other digital media properties to sell space on their media. Now, Magnite could be even better prepared for a spectacular 2021 as it moves to the back of the booming CTV sector. The acquisition of SpotX, a video supply platform, from the parent company RTL Group should contribute to the deepening of this strategic game.
The companies said SpotX’s purchase price was $ 560 million in cash and $ 14 million in Magnite shares, for a total of $ 1.17 billion, based on the closing price of Magnite shares as of Thursday.
SpotX was a competitor to Magnite before the acquisition, along with companies such as PubMatic, which recently went public. Other competitors include Google, which operates several links in the supply chain, Comcast-owned FreeWheel, Index Exchange and OpenX.
The transaction is expected to be completed in the second quarter of this year. The company said it will be the largest independent television and video ad platform after the transaction is completed. The company serves customers in other formats, including display, mobile and audio.
CTV is a smaller part of Magnite’s overall business, but a great growth opportunity. (A December note from Susquehanna wrote that about 80 percent of her income comes from desktop and mobile, but that “CTV is the jewel in the crown.”) Connected television was a hot sector in the pandemic, which dramatically accelerated what experts in industry believe it would be a multi-year transition to CTV. The more people at home and streaming accepted movies and shows, the more opportunities for advertising technology partners to show them ads on platforms.
For its part, Magnite said that CTV’s total revenue increased by more than 50% year-on-year in the third quarter of 2020. Magnite also said that the number of advertisers using its public address functions has increased. twice and a half between the third quarter of 2019 until the same period in 2020.
Magnite says she has an exclusive relationship with Hulu and its owner Disney. It also works with other services such as Sling TV, Fubo TV, Philo and Pluto TV, which is owned by ViacomCBS. They also collaborate with channels to broadcast their offerings of CTV applications, including Fox and Discovery.
Although advertisers have historically worked with a number of supply-side partners, there has been a tendency to limit spending to fewer partners. Advertisers and agencies are looking to do business with fewer offer platforms to avoid inefficiencies and the potential for fraud. Buying competitors to scale up and inventory could be a way for Magnite to gain a competitive advantage over its peers.
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Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.