Yahoo to buy video-ad service BrightRoll for $640 million

Yahoo agreed to acquire video-advertising service BrightRoll for about $640 million in cash, adding marketing tools to drive chief executive officer Marissa Mayer’s turnaround effort.

BrightRoll, one of Yahoo’s biggest deals under Mayer, is profitable and should exceed $100 million in revenue this year, the Web portal said in a statement Wednesday.

Yahoo expects the purchase, which is subject to customary closing conditions, to boost earnings before certain items.

The acquisition would help bolster Yahoo’s position in a growing part of the digital-advertising market.

Revenue from online video ads may surge 56 percent this year in the U.S. to $5.96 billion, according to researcher EMarketer.

Yahoo will have just 2.4 percent of the worldwide market for all digital ads this year, lagging behind Google and Facebook.

“Video, along with mobile, social, and native, is driving a surge in digital advertising,” Mayer said in the statement.

“BrightRoll is a terrific, strategic and financially compelling fit for our video advertising business.”

San Francisco-based BrightRoll serves many of the largest brands and agencies, including 87 of the AdAge Top 100 U.S. advertisers, according to the statement.

It specializes in what’s called programmatic advertising, which helps automate the buying of ads.

EMarketer estimates that the market for programmatic video ads in the U.S. will rise to $3.84 billion by 2016 from $710 million this year.

“Consumers buy the hardware so they can play the software,” Fils-Aime said.

“When you have a robust library of games, that’s when consumers jump in.” (Bloomberg)