VideoEgg to Buy Six Apart, Rebrand as Say Media
Ad network VideoEgg will acquire Six Apart, owner of the MovableType and TypePad publishing platforms as well as a sizable social media ad network, and rebrand as Say Media. The combined company will boast 345 million monthly global unique users.
For VideoEgg, the new company name will emphasize its focus on social media and will dissociate it from the video ad space in the minds of media buyers.
“It pigeonholed us,” said VideoEgg President Troy Young. “People thought we were a streaming media network, which we weren’t. And VideoEgg, while a spirited name, didn’t feel like the mature media company we wanted to be.”
Six Apart CEO Chris Alden will step down when the transaction is completed in approximately 60 days, but most of the firm’s other senior management will transition to roles at Say Media. Say Media’s total headcount after the sale will be over 200, and its base of operations will be in San Francisco. Financial terms were not disclosed.
The main driver of the acquisition was scale in social media. Six Apart’s ad network reached approximately 90 million U.S. unique users on thousands of sites in April, according to comScore. In May the company unveiled an ad product, TypePad Conversations, that uses sponsored questions to help brands leverage that audience in meaningful ways.
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Digital Ad Agencies Attract Interest of Would-Be Buyers
The deal-making in online advertising continues, as talks over the sale of two ad firms heat up.
Private-equity firm General Atlantic LLC has held preliminary talks with several companies over a possible sale of AKQA Inc., one of the U.S.’s largest digital ad shops, according to people familiar with the matter.
Meanwhile, New Jersey-based Rosetta LLC, another large digital ad firm, is in talks to buy Level Studios, a 15-year-old interactive marketing firm, according to a person familiar with the matter. Terms of the deal could not be determined.
General Atlantic, which took a majority stake in AKQA in 2007, hired Morgan Stanley to explore a possible sale after it received an unsolicited bid for the San Francisco-based agency, according to one of the people familiar with the matter. One company Morgan Stanley has approached is Dentsu Inc., Japan’s largest ad company, the people familiar with the matter said.
Dentsu hasn’t made a formal bid for AKQA but has made an “expression of interest” and suggested AKQA is valued at about $500 million, one of these people said. Two people familiar with the matter say that General Atlantic is seeking at least $600 million for AKQA.
AKQA, which has more than 800 employees, has long been an attractive acquisition target because of its ability to attract big brand advertisers, including Coca-Cola Co., Microsoft Corp. and Unilever PLC. A person familiar with the matter says early financials on AKQA shows the firm had about $120 million in revenue last year and is expected to have $150 million in revenue this year.
Tom Bedecarre, AKQA’s chief executive, has long wanted to take AKQA public. Mr. Bedecarre declined to comment.
A U.K. blog reported Dentsu’s interest in AKQA. A spokeswoman for Morgan Stanley declined to comment.
Dentsu has been on an aggressive buying spree, snapping up ad firms such as McGarry Bowen in New York, as it seeks to become less-dependent on its homeland for revenue.
Chris Kuenne, chief executive of Rosetta declined to comment on talks to buy Level Studios, except to say, “We are always looking at possible acquisitions.” Executives at Level couldn’t immediately be reached for comment. Level Studios, which is based in San Luis Obispo, Calif., has worked on half of marketers such as Hewlett-Packard Co. and Research in Motion Ltd.
Digital ad firms—which help companies pitch their products on the Internet and through mobile devices—are of particular interest to ad and media companies as online ad spending continues to grow and other mediums struggle. ZenithOptimedia, a media-buying firm owned by Publicis Groupe SA, predicts global online ad spending will rise 13% next year to $61 billion while global ad outlays in newspapers is expected to decline about 3% next year to $95 billion.
The pace of deal-making on Madison Avenue is accelerating as the recession begins to lift, ad executives say. Indeed, earlier this year newspaper and magazine publisher Hearst Corp. acquired iCrossing, a digital ad firm that specializes in search ads.
Read More: WSJ.com (Full Article Here)
Shaping Ads for Web-Connected TV
Technology companies racing to deliver video to the living room over the Web are exploring the idea of offering ads on their services, seeking to capture some of the billions of ad dollars that flow to television.
A few companies, including TiVo Inc. and Microsoft Corp., have released ad products tied to broadband-video services designed to be accessed on television sets, not computers. They include ads that can take a viewer to a movie trailer on YouTube when the viewer pauses a TiVo-recorded TV program, as well as ads that can be accessed by clicking a tile on the navigation menu of Xbox Live, the online gaming and video service for Microsoft’s Xbox game console.
Other efforts are also afoot. Google Inc. has been meeting with some of Madison Avenue’s biggest media-buying firms, exploring ways to sell ads through its Google TV software due out this fall. Sony Corp. and other hardware makers are launching TVs and set-top boxes equipped with the software, which allows users to search and watch Internet programming.
The Internet giant has told ad executives that it eventually plans to sell ads that appear in search results when consumers search for what they want to watch, some of those ad executives say. But those spots won’t interrupt the ad stream that appears during a program.
The company has told media-buying executives that it doesn’t plan to put ads on its service for at least a year. A Google spokeswoman says the company has been approached by advertisers about Google TV, but it is “solely focused on launching a quality experience for users, and does not have any specific plans for advertising” at this time.
Sony, meanwhile, is considering selling video ads that play before premium programming that consumers can access through its Internet-connected TVs, Blu-ray players and PlayStation 3 video consoles, says one person familiar with the matter. The person says these ads could be available in coming months. Sony declined to comment.
At the same time, traditional online-ad companies like Yahoo Inc. are adapting their Internet-ad technology to display ads that run alongside Web video displayed on TV screens.
This isn’t the first time that tech companies have sought a foothold in the TV-ad market. In recent years, Google and Microsoft launched television-ad services seeking to sell commercials targeted to specific kinds of consumers and measure those ads’ performance based on data from set-top boxes. But analysts say those businesses have remained modest, in terms of revenue, constrained by the type and amount of inventory TV networks and satellite companies have given them to sell.
A Google spokeswoman its TV-ad business has grown “significantly.”
This time around, tech companies are looking for new ad possibilities created by delivering video directly to TV sets over the Web. The software for doing so offers them new screen real estate for showing ads and the ability to target ads based on what viewers watch and the Internet services they access. Analysts say such ads could chip away at the market for conventional commercials over time.
TV ads are a massive business. Last year, TV accounted for nearly 36% of the $148.3 billion U.S. advertising market, according to ZenithOptimedia, a media-buying firm owned by Publicis Groupe. The firm predicts the U.S. TV-ad market will grow 3.8% to $55.8 billion in 2010.
Cable and satellite companies, too, have been testing new technology to target ads more precisely, along with new ad formats that let consumers respond to an ad through their remotes.
TiVo Chief Executive Tom Rogers says that since cable operators use differing set-top-box technology, the cable industry doesn’t have the ability to sell targeted ads on a mass scale, leaving an opening for tech companies. Cable and TV networks haven’t moved fast enough to promote new formats, he says. “The old models, with the amount of commercial avoidance, just aren’t going to hold up.”
This summer, PepsiCo‘s Mountain Dew brand launched its first campaign with Xbox Live. Unlike traditional TV commercials, the ads, which prompted Xbox users to vote for a new flavor of the soft drink, allowed users to engage with it when they were interested, Brett O’Brien, director of marketing for Mountain Dew.
But many advertisers remain skeptical. For one thing, it isn’t clear which ad formats will work best on broadband-connected TVs, says Tracey Scheppach, senior vice president and video-innovations director at Publicis’s Starcom MediaVest Group.
Tech companies not only have to win over advertisers, but also those who create video programming. While a growing number of TV and movie studios are offering content through new Internet-video services designed to be accessed directly from TVs, many are doing so on a paid basis. That approach is less likely to upset partners like cable operators who pay networks to carry their programming.
“In order For there to be a viable alternative model for distribution, a majority of media companies are going to have to be in a place where they can stomach the shift from subscription to advertising,” says Scott Ferris, general manager of Microsoft’s TV media advertising business group. He says that in the short term he thinks ads on broadband-video services will be confined largely to inside software applications on the services.
But, Mr. Ferris adds that, over time, a broadband-based video services target at TVs will gain national scale and “an advertising model will creep in there.”
Read More: WSJ.com (Entire Article Here)