Extreme Reach has closed its $485 million acquisition of DG's TV ad business, approximately 6 months after announcing the deal. Extreme Reach's CEO and co-founder John Roland told me this morning that all DG customers are being transferred to Extreme Reach's cloud-based delivery platform. The combined company will have $270 million in revenues and 750+ employees.
As John explained, while the short-term tactical benefit of the deal is to gain significant scale in the core business of delivering TV ads to over 7K different broadcast TV stations in North America, the longer-term, more strategic play is to better position Extreme Reach for the fast-approaching era of multi-screen advertising.
John notes that with 9 out of 10 pre-roll ads still re-purposed TV spots (which can cost $300K apiece to produce), much of the creative used in online video and TV advertising will be common for the foreseeable future. What's changing however, is that advertisers are ramping up their spending on both online and on mobile/connected TV devices to reach their target audiences.
John sees lots of complexity as multiscreen campaigns play out: multiple technology vendors for advertisers/agencies to manage, difficulty in creating/executing multi-screen media plans and huge headaches measuring the results and ROI. This is where Extreme Reach plans to ultimately leverage the DG acquisition - by handling more of plumbing for TV ad distribution, it's in a better position to drive efficiencies for agencies/advertisers in online and mobile delivery as well.
John notes that Extreme Reach is already ingesting 5,000 video ads/day from over 1,300 post-production houses in its network. It currently works with 95 of the Fortune 100 brands. For many of these companies, their online/mobile advertising is still nascent, so the logistical challenges of managing multi-screen campaigns are not yet apparent. But John cites examples of more sophisticated advertisers, already realizing multi-screen efficiencies. For instance, one automaker that creates 4,500 30-second spots per year, now has 200 people using the Extreme Reach platform.
No doubt, more high-quality programming will find its way online and onto mobile/connected TV devices. As audiences follow, more advertisers will run multi-screen campaigns and seek to streamline their workflows. One other big benefit Extreme Reach offers advertisers is talent tracking and compensation, since SAG and other unions will want to ensure talent is compensated properly when more and more ads are running online.
Beyond operationalizing the DG customers this year and setting the stage for multi-screen campaigns, John said another big focus is strengthening its programmatic capabilities in online. Extreme Reach is pursuing internal product development, but John also left open the door for acquisitions.
(Below is an interview John did with NECN last August after announcing the DG deal)