RhythmOne acquires YuMe for $185M, creates integrated online ad solution

video advertising

RhythmOne is acquiring YuMe for $185 million in a deal that the company says will create a fully integrated online advertising solution.

Set to close in the first quarter of 2018, the combination of the two companies is set to develop a larger company that will have a broader range of demand-side and supply-side capabilities for mobile, video, connected TV and programmatic trading.

The combined marketplace is anticipated to be a top five comScoreranked marketplace that will facilitate transparent connections between thousands of advertisers and a massive supply of brand-safe inventory.

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RhythmOne said its platform is designed to meet a broad range of campaign objectives, providing turnkey solutions for both brand and performance campaigns. Additionally, the platform will provide advertisers with a scaled and independent alternative to entrenched players.

“Acquiring YuMe accelerates RhythmOne’s strategy to build a unified programmatic platform with unique audiences of differentiated quality at scale,” said Ted Hastings, CEO of Rhythm One, in a release. “Through YuMe, RhythmOne gains access to premium video supply including emerging, high-value connected TV inventory, unique customer insights, cross-screen targeting technology and established demand relationships.”

According to the two companies, each brings complementary elements to the table.

YuMe offers a set of demand-side software and services that have become well-known entities for brands, agencies and trading platforms, a robust, first-party data management and targeting platform and global programmatic capabilities. RhythmOne’s strengths are primarily focused on the supply side as well as programmatic platform capabilities represented by its multi-channel, multi-format ad exchange, whereby advertisers and agencies can reach targeted, engaged audiences at scale.

YuMe’s relationships with agencies and brands and its demand-side platform complement RhythmOne’s unified programmatic platform.

It appears that RhythmOne’s acquisition is well-timed. A recent eMarketer report revealed that for the first time in 2016, digital advertising spend outpaced that of television. By acquiring YuMe, RhythmOne will create a combined organization with what will be one of the largest cross-device supply footprints. By adding comScore data from the two companies, the combined entity would reach over 220 million unique visitors per month. What this means is advertisers will be able to go to a single source to meet their advertising objectives.

YuMe has built a first-party data management and targeting platform that provides unique insights for brand advertising campaigns, while RhythmOne’s analytics, data management platform and brand safety technology provide transparency and drive results for performance-based campaigns. The unified, proprietary data set, augmented by machine-learning algorithms, will enable the combined company to deliver against a broad range of advertising objectives. The data will also offer insight for publishers looking to derive additional value from their audiences.

Upon completing the acquisition, RhythmOne’s CEO Ted Hastings will continue in his role as president and CEO of the combined company. YuMe will also appoint two directors to the newly constituted board of directors, one of whom will be Eric Singer, who will become the chairman of the board.

Under the terms of the agreement, YuMe shareholders will receive $1.70 per share in cash and 7.325 shares in RhythmOne stock, which equates to a total of $185 million.

RhythmOne anticipates the acquisition to be accretive in the first full year of ownership and believes that the acquisition represents an attractive opportunity to achieve savings of approximately $10-12 million per annum (before tax) across the combined businesses from functional redundancies, duplicative vendor relationships and public company costs.