Michael Barrett, CEO of Magnite.
Magnet
Ad tech player Magnite acquires SpotX, a platform for linked TV (CTV) and video advertising, for $ 1.17 billion in cash and inventory, the companies announced Friday.
Magnite’s inventory rose more than 26% after the deal was announced. Magnite helps publishers of websites, programs, CTV channels or other digital media properties to sell space in their media. Now, Magnite may be even more set on a striking 2021 as it rides on the back of the booming CTV sector. The acquisition of SpotX, a video platform from parent company RTL Group, should deepen the strategic game.
According to the companies, SpotX’s purchase price consists of $ 560 million in cash and 14 million shares of Magnite, for a total of $ 1.17 billion, based on the closing price of Magnite shares from Thursday.
Prior to the acquisition, SpotX was a competitor of Magnite, along with companies such as PubMatic, which became famous recently. Other competitors include Google, which operates on several links in the supply chain, FreeWheel owned by Comcast, Index Exchange and OpenX.
The deal is expected to close in the second quarter of this year. The company said it would be the largest independent CTV and video advertising platform in the programmatic space once the deal closes. The company serves customers in other formats, including screen, mobile and audio.
CTV is a smaller part of Magnite’s overall business, but a major growth opportunity. A Susquehanna note in December wrote that about 80% of its revenue came from computers and mobile phones, but that “CTV is the crown jewel” was thought to be a multi-year transition to CTV. movies and programs, the more opportunities there are for ad tech partners to show ads on platforms.
Magnite, in turn, said its total revenue for CTV grew by more than 50% year-on-year in the third quarter of 2020. Magnite also said that the number of advertisers using its targeted features has grown two and a half times between its third quarter in 2019 and the same period in 2020.
Magnite says he 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 are owned by ViacomCBS. It also works with broadcast channels on their CTV app offerings, 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 want to do business with fewer platforms on the supply side to prevent inefficiency and the possibility of fraud. Buying competitors to increase its scale and inventory can be a way for Magnite to give a competitive advantage over its peers.
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Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC.