Web Video Ad Startups ScanScout, Tremor Media Join Forces in Challenge to Hulu, YouTube

11/8/10Follow @wroush

Boston-based ScanScout, which serves targeted video ads to a network of 1,000 online publishers, has been acquired by New York-based competitor Tremor Media, the two companies announced today. The combined company, which will be headed by ScanScout CEO Bill Day, hopes to form a video ad distribution network large enough to compete with Hulu, YouTube, Brightroll, and the other leading digital video players. The news was first reported today by Ad Age.

I profiled ScanScout in a February column focusing on the company’s “Super Pre-Roll” format, a new form of interactive video ad shown before a video program begins. The company was founded in 2005 and has raised about $17.5 million from venture firms General Catalyst Partners, EDBI, First Round Capital, Baseline Ventures; strategic investor Time Warner; and angel investor Ron Conway. Tremor is also venture-backed and has raised about $80 million over the past four years from Canaan Partners, DFJ Growth Fund, Masthead Venture Partners, Meritech Capital Partners, Triangle Peak Partners, SAP, and the European Founders fund. The terms of the acquisition were not disclosed.

Day said in the merger announcement that the combined companies will have an inventory of video ad slots large enough to be a “clear must-buy” for companies with large online video budgets. “Tremor Media is the largest video ad network serving the most advertisers with absolutely the largest footprint of premium publishers and targeted video inventory,” Day said.

In fact, Hulu serves more video ads than the combined Tremor/ScanScout—794 million in September, according to ComScore figures cited by Ad Age, compared to 668 million for Tremor/ScanScout, 476 million for Brightroll, and 243 million for Google. But Tremor’s network will be the largest in terms of the sheer number of publishers involved, encompassing more than 3,000 websites serving streaming video.

Tremor also says it provides clearer, more measurable results for advertisers’ dollars, thanks to its ability to reach specific audiences at specific times of day—for example, women during weeknight prime-time hours. Day said the combined company would continue to develop its proprietary video ad formats, including Super Pre-Roll and Tremor’s vChoice.

The Tremor-ScanScout merger is part of a wave of consolidation in the online video industry. AOL acquired Spark Capital-backed video syndication site 5min Media in September, and Specific Media bought video network BBE last month. According to Ad Age, Undertone Networks is expected to announce next week that it’s buying video syndication and advertising platform Jambo Media.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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