Outbrain is buying Video Intelligence for $55 million, here’s why

By Ronan Shields

Ad tech’s spate of public listings over the last 12 months has helped spur a further round of mergers and acquisitions in the space as the newly-minted public companies attempt to prove differentiation.

In a sign of this trend, Outbrain today announced its intended $55 million purchase of Video Intelligence – its first acquisition following its July IPO – serves as a prime example of this trend as it seeks to make inroads to the connected TV space.

Video Intelligence’s technology helps match video with appropriate text-based content, an offering that aligns with Outbrain’s content recommendation service, with the Switzerland-based company’s client roster including media companies such as Axel Springer, IDG and Tegna, according to its website.

Outbrain co-CEO David Kostman told DigiDay the purchase of Video Intelligence would help boost its existing video business which accounted for 9% of its Q3 revenues, and amounts to approximately $100 million of revenue per year.

“Mostly our business is in outstream and we were looking to see how we can expand to instream video which is a much bigger area of opportunity,” he added.

Crucially, Video Intelligence is also in the early phases of developing its CTV offering, a strategic priority for many in the ad tech space, with the company recently establishing partnerships with Pluto TV, Rakuten TV as well as Samsung TV Plus.

Kostman explained how this would play a role in Outbrain’s attempt to cash-in on advertisers shifting their budgets from linear to CTV. “We believe this will be the initial step that we make into CTV and OTT, ” he added. “They can contextually match ads in the connected TV area and we hope to leverage that.”

Outbrain’s IPO earlier this year was just one of a wave of ad tech debutants on the public markets, which also consisted of special purpose acquisition companies, with the companies now tasked with putting their newly-raised funds to work in order to demonstrate growth to Wall Street.

Speaking with DigiDay prior to the announcement of today’s Outbrain deal, Dan Salmon, an equities analyst at BMO Capital Markets, explained the dynamics at play, “When companies go public, they’re not expected to just sit on it like a bank, you’re expected to do something with it.”

However, all of these public listings come at a time when the sector is faced with some existential issues as data privacy laws prompt the industry’s principal tech platforms, such as Apple and Google, to implement restrictions on ad tech’s ability to generate revenues.

In response to the decline of these foundational ad tech tools, many are turning their attention to two of the hottest trends in digital at the moment: the rise of CTV, plus the convergence of ad tech and ecommerce.

Considering the respective headwinds, and tailwinds, facing ad tech companies, the acquisition strategies of Outbrain and rival content recommendation company Taboola, which also went public via way of a SPAC earlier this year, can be considered as case …read more

Source:: Digiday