Monday, November 8, 2010, 10:09 AM ET|Posted by Will RichmondMore consolidation among video ad networks, as market leader Tremor Media has acquired ScanScout, creating a new dominant player. comScore reported in its Sept. 2010 online video rankings that Tremor on its own was the #2 video ad network with over 525 million video ads served and reach to over 26% of the U.S. population. For its part ScanScout says it reaches 140 million unique viewers per month. Tremor most recently raised a $40 million round in April, bringing its total funding to $82 million, while ScanScout last raised another $8.5 million Oct. '09.
The deal's main motivation is to increase scale and targeting in order to better serve advertisers. This is a recurring theme among video ad networks, who are benefiting from a massive surge in video viewership, thereby leading to increased advertiser interest. While video ad revenue is still modest, with PWC and IAB reporting $627 million in the first half of 2010, it was the fastest growing online category, up 31% vs. 2009. With more premium content coming online, growth is expected to accelerate, leading to TV ad budgets to migrate to online.
Both Tremor and ScanScout have been aggressive in rolling out new video ad units that enhance interactivity, helping differentiate the online video value proposition from conventional TV advertising. More details on the deal after I speak to Tremor's Executive Chairman Jason Glickman shortly.
Update: I just spoke to both Jason and Bill Day, Tremor's CEO, who see the deal creating a 'must-buy' for advertisers deploying budgets in online video. They believe the combined company will be the leading pure-play in online video advertising with the highest actual reach, potential reach and number of viewers. I asked about whether other recent deals which have brought together display and video ad capabilities and they both believe those deals are reactive and that display and video are bought and measured very differently. As a result their focus is strictly on video. They don't believe there's any issue with size of market for video and envision continued shifting of TV budgets.
Tremor plans to work across screens and both companies recently launched HTML5 support and will be making a big push around mobile video apps. It's easy to envision Tremor making follow-on acquisitions in mobile specifically though neither Bill nor Jason said anything is planned. Targeting ads in connected devices is also further down the road. For now Tremor believes it has the largest sales team with 40 professionals in 11 offices in the U.S. Its size and advertisers' evolving needs are sure to prompt more consolidation.