TV advertising and online video advertising are taking a big step toward being integrated today, as a result of a deal that Extreme Reach has struck to acquire DG's TV ad business for $485 million.
The deal brings under one roof the 2 big operators of networks that deliver ads to TV stations. In its latest annual report, DG said it delivers ads to approximately 5,900 broadcast and cable TV stations from 7,400 different media agencies. Earlier this year Extreme Reach told me that it delivers ads to 7,000 TV stations on behalf of 3,000 different agencies and advertisers. With the deal, DG will re-focus its efforts exclusively on online advertising, via its MediaMind platform, which it acquired in July 2011, along with numerous other smaller online advertising assets.
More interesting here for observers of the online video advertising space is that Extreme Reach will be in an even stronger position to pursue its strategic priority of integrating the delivery, tracking and reporting of "TV" ads and "online video" ads. I'm using quotes, because, as consumers have massively adopted connected/mobile devices and then use them to view premium video content, the distinction between the terms "TV" and "online" is becoming less meaningful. In other words, video is video, regardless of consumption device.
For advertisers, who, as always, seek to cost-effectively reach target audiences and achieve their branding/sales objectives, the emergence of online delivery has created growing complexity in planning and post-campaign analysis. Reducing this complexity, and helping advertisers understand how to allocate spending between traditional and online video ad placements is core to Extreme Reach. A key enabler is Extreme Reach's cloud-based, SaaS architecture that gives advertisers and agencies greater control and reliability in delivering previously uploaded ads to intended TV outlets.
Further, as I described earlier this year, Extreme Reach has developed a cross-media reporting suite that provides clients actual TV and online video ad campaign results, integrated into customizable reports. Extreme Reach is able to do this because it is handling all the ad delivery and is able to monitor both TV and online video ad performance. These cross-media reports are a big differentiator for the company relative to pure play online video ad providers.
Still, as I noted, it is early days for many advertisers and agencies in requesting and/or requiring such cross-media reports. Many advertisers are still just ramping up their online video campaign initiatives, while agencies continue to evolve their organizations to handle online video's emergence. Therefore short-term, the DG acquisition can be seen as Extreme Reach enlarging its footprint in the bread-and-butter TV ad distribution business. Longer-term however, it is a smart bet that TV and online video will become ever closer, with advertisers needing technology partners that can facilitate the transition.
This is the space Extreme Reach wants to own down the road and the DG deal is a huge building block toward achieving its vision.