Opera Acquires Mobile Video Firm AdColony

Opera Software on Tuesday announced acquiring mobile video ad platform AdColony to spur the company’s broader mobile ad growth. The deal was made for $75 million in cash, with potential earn-out payments that would bring the total to $275 million.

The move pairs Opera with one of the largest players in the mobile video space and gives the companies a combined audience of more than 700 million.

TechCrunch had previously reported that a deal was in the works between the companies.

“With the addition of AdColony, we will be able to offer advertisers a market-leading comprehensive suite of ad solutions, delivering creative, targeting, analytics and measurement,” said Opera CEO Lars Boilesen in a conference call about the deal.

Ultimately, this transaction is about driving growth across all our key customer targets,” he added -- including mobile consumers, operators, publishers and marketers.

The Oslo-based mobile software firm has rapidly expanded its advertising business -- Opera Mediaworks -- with the acquisition of various companies, such as AdMarvel, Mobile Theory and 4th Screen, in recent years. This year, it added German startup Apprupt, and Boilesen indicated that Opera plans to continuing investing for growth.

In AdColony, the company is buying into one of the fastest-growing -- if still small -- digital ad categories in mobile video. Opera cited a Gartner forecast projecting that mobile advertising will grow to $41.9 billion by 2017. In the U.S., eMarketer has predicted it will increase from 660 million to $1.4 billion this year, and reach $6 billion by 2018.

Nielsen said the mobile video audience on smartphones in the U.S. topped 100 million in the fourth quarter of 2013.

“At Opera, we recognize that video is the No. 1 medium for content consumption on mobile devices today,” said Opera Mediaworks CEO Mahi de Silva. He suggested that the company’s ad-serving technology and programmatic buying tools would help publishers monetize video inventory more effectively.

AdColony CEO Will Kassoy noted that the company would maintain its brand and operate as a stand-alone division within Opera. He added that half of its sales today are in the U.S., while its video ad network reaches 300 million worldwide.

“We see great parallels between mobile advertising and television, from the consumer perspective, and believe were at the very early stages of a spending shift to mobile,” he said. To that end, AdColony in March at the SXSW conference debuted a new in-feed video format that would allow publishers to generate higher ad revenue while users scroll a stream of content. 

Kassoy said the Instant-Feed HD video product would be rolled out widely in the fall after testing with a limited number of brands. Until now, AdColony has focused on serving pre- and post-roll ads in apps for mobile game and video publishers. Kassoy earlier this year told MoBlog the company had reached a $100 million-a-year revenue run rate.

The Opera acquisition, which has been approved by both companies’ boards, is expected to close in the third quarter. 
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