In a sign of the increased importance of online videos and video advertisement, software company Adobe announced on Thursday that it would acquire video advertisement company TubeMogul for $540 million.
Under the terms of the agreement, Adobe will acquire all of TubeMogul’s common shares for $14 per share. TubeMogul’s share price immediately jumped to $13.95 on Thursday, representing an 81.75 percent surge for the day.
Adobe stated in a press release that “the acquisition of TubeMogul further strengthens Adobe’s leadership in digital marketing and advertising technology.” The plan is to turn Adobe into a “one-stop shop” for video advertising as TubeMogul combines with Adobe Marketing Cloud.
TubeMogul CEO Brett Wilson thanked his clients and shareholders in a letter and called it the “the industry’s first independent end-to-end video advertising platform.” The company had been struggling since launching an IPO in 2014, reporting net losses of $12.4 million in the 2016 3Q.
The Future of Video Advertising?
The acquisition of TubeMogul is a sign that Adobe intends to take on giants like Google and Facebook in the field of advertising. TubeMogul advertises itself as a software platform which “enables brands and agencies to plan, buy, measure and optimize their global advertising.”
TubeMogul specializes in buying video advertisement space on the demand side, a field increasingly attracting the attention of advertisers and software companies. Advertisers are willing to pay a premium for a few seconds of online video advertisements which they believe offer the best chance of attracting consumers.
Adobe’s marketing sections such as Adobe Marketing Cloud will now expand and be able to provide cross-platform advertising services, that can compete with Yahoo and Facebook’s advertising capabilities. The company may also soon consider providing marketing automation services. Marketing automation refers to the software that exists with the goal of automating marketing actions. Many marketing automation companies such as GetResponse, automate repetitive tasks such as emails, social media, and other website actions.
Some of TubeMogul’s competitors like BrightRoll and LiveRail respectively, had already begun providing marketing automation services. This is a sign of the importance which software companies are placing on bolstering their digital marketing through advertisement technology that can help plan and place advertisements for the best value.
But despite this growing interest, independent ad tech companies like TubeMogul and BrightRoll had struggled to turn a profit, according to The Street over the past two years. Some investors are hopeful that the removal or merger of struggling companies will revive the ad tech market, especially as larger companies enter the field.