Yahoo! shareholders can take comfort in that the purchase price was lower than initially reported: $640 million vs. $700 million. They can also be heartened that the acquisition should make money unlike Tumblr or the various acqui-hires Yahoo! has made.
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BrightRoll is expected to generate $100 million in revenue this year and be close to break-even -- and the Wall Street Journal says BrightRoll is profitable.
Yahoo!'s revenue has been shrinking during the last few years, partly because of the shift in dollars away from PC banner ads to spending on Facebook (FB) and Twitter (TWTR) and partly because of Yahoo!'s self-inflicted wounds of bad hires.
CEO Marissa Mayer doesn't have great mobile properties to suck in mobile-ad dollars. She's pushing native ads, but they monetize at a far lower rate than traditional banner ads and so it's going to take a while to make up for the loss of banner revenue.
Video ads monetize at the highest CPMs (cost per thousand ad impressions) in the ad landscape though.
There's a reason why Yahoo! has been building up its Screen property through licensing Saturday Night Live content and bankrolling the continued development of shows such as Community. There's a reason Yahoo! was sniffing around the possibility of buying Hulu and then DailyMotion. To make those high CPMs, you need video inventory and then ads to sell against it.
BrightRoll helps with the second part of this problem. It gives Yahoo! a programmatic video ad platform that it can plug in and start pumping its traffic through. Yahoo! will get BrightRoll's existing customers and then can add its own customers as well.