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Broadcast entertainment group RTL has made what it describes as an early entry into the rapidly growing market for programmatic online video advertising by acquiring a 65 per cent majority stake in Denver-based video advertising monetisation company SpotXchange.
In addition to RTL Group’s initial €107 million investment, RTL and SpotXchange’s current shareholders have agreed on an earn-out component that might increase the initial consideration subject to the future performance of SpotXchange. Under the terms of the deal, RTL Group also has the opportunity to acquire the remaining shareholding in the future.
The deal is subject to US competition authority approval and is expected to close by the end of August 2014. The investment is the next step of RTL Group’s strategy to become a leading player in all segments of online video and online video advertising. RTL Group becomes the first major broadcaster to invest in the rapidly growing market of programmatic online video advertising.
Founded in 2007, SpotXchange was the first online advertising marketplace with an exclusive focus on video. Today, SpotXchange provides a comprehensive video advertising monetisation platform to hundreds of publishers around the globe such as The Atlantic, Hearst Corporation, Meredith Video Studios, Mail Online, NDN and Adaptive Media who use the platform to maximise revenue for their desktop, mobile and connected TV video advertising inventory while driving down operational costs. SpotXchange empowers publishers and their sales teams to operate in an ever increasingly complex digital ecosystem by providing innovative and industry-leading programmatic technologies that yield unprecedented transparency, insights and control over the buying behavior of today’s leading brands. Over one billion auctions for video advertising impressions are transacted through the SpotXchange platform daily, with ads delivered to 335 million people in over 100 countries per month. The company currently has 180 employees with headquarters in Denver, Colorado, and offices in several US and international locations.
According to RTL, online video advertising is currently the fastest growing digital advertising segment, expected to grow globally at a Compound Annual Growth Rate (CAGR) of 24 per cent between 2014 and 2018. This growth is driven particularly by programmatic video advertising which is estimated to increase from $2.7 billion in 2013 to US-$15.4 billion in 2018 worldwide
Anke Schäferkordt and Guillaume de Posch, Co-CEOs of RTL Group, said that following its investments in non-linear TV services and in multi-channel networks on Youtube, RTL Group had already become the leading European media company in terms of online video views. “The logical next step in our strategy is a structural move into the area of digital monetisation – improving our skills by adding innovative data- and technology-based competencies. SpotXchange is the perfect fit for RTL Group for such a move: it has a first-class management team that has built a leading, state-of-the-art platform for programmatic selling of online video advertising. With its impressive growth story and strong positioning in the United States, SpotXchange also represents a unique opportunity to enhance RTL Group’s presence in the world’s biggest and most advanced media market.”
Michael Shehan (CEO) and Steve Swoboda (COO and CFO), co-founders of SpotXchange, said they believed RTL was the ideal partner to help SpotXchange expand the reach of its comprehensive video ad monetisation services. “This investment demonstrates RTL Group’s progressive vision and embrace of programmatic trading, ad serving and yield optimisation in the digital arena. The companies comprising RTL Group operate in a decentralised fashion which will allow SpotXchange to thrive and grow as the last independent digital video ad monetisation platform while providing significant opportunities through partnership with RTL Group’s leading European broadcast companies and top tier global content producers. Joining RTL Group will present incredible benefits and opportunities for SpotXchange’s publishers, buyers and people.”
Under the terms of the transaction, RTL Group will appoint three of five members of the Board of SpotXchange. Michael Shehan and Steve Swoboda will continue to manage the day-to-day operations of the company, reporting to its Board.
RTL Group and the management team of SpotXchange have developed a joint growth plan to keep SpotXchange on its current growth path in the US and Asian-Pacific region, while simultaneously focusing on an accelerated roll-out in Europe.