updated - November 21, 2019 Thursday EST
Online giant Yahoo shells out $640 million to buy digital video advertising service BrightRoll in order to boost sales after reporting financial plateaus this past few years.
The deal which was announced on Tuesday, Nov. 11 is Yahoo's first major acquisition since it made a deal with emerging Chinese e-commerce service Alibaba Group Holding Ltd. last September worth $9.4 billion.
The Sunnyvale, California-based company had been lagging behind online rivals Facebook and Google, and CEO Marissa Mayer plans to use the $6.3 billion from the Alibaba deal in order to takeover its grip in the e-commerce industry.
Founded in 2006, San Francisco-based BrightRoll automatically places ads in videos on mobile devices and personal computers, has made networks with biggest advertisers in the United States, generating over $100 million in annual revenue.
"Acquiring BrightRoll will dramatically strengthen Yahoo's video advertising platform," Mayer predicted in a Tuesday blog post.
However, investors didn't see the deal as striking ,though. Yahoo's stock went down 3 cents to $49.02 after the announcement of the deal with BrightRoll.
The deal could counter Yahoo's long-running decline in display advertising including video pitched and other visual marketing tools. From January to September this year, the company's advertising revenue went down 4 percent from last year to $1.2 billion after cutting out commissions.
Shares of Yahoo are now 2.4 percent of the worldwide market, down from 3.9 percent in 2011, while that of rival companies Facebook and Google had 8 percent and 32 percent share this year.
Revenues from advertisements at Facebook and Google were also reported to increase by 20 percent or more as marketers shell out more money into digital advertising to promote to consumers spending a lot of time with their mobile device and personal computers.
"This plugs a hole for (Yahoo)," said Outsell analyst Randy Giusto. "They obviously needed to do something."
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