* RTL Group to pay $144 mln for 65 pct stake in SpotXchange
* SpotXchange auctions over 1 bln advertising spaces per day
* Acquisition also give RTL access to young media users
(Rewrites, adds co-CEO comments, background)
By Harro Ten Wolde
FRANKFURT, July 31 European broadcaster RTL
Group has agreed to buy a 65 percent stake
in U.S. digital video advertising group SpotXchange, hoping to
tap into a fast-growing market and get an idea of what drives
young media consumers.
RTL, which is controlled by German media conglomerate
Bertelsmann, will pay $144 million for the company
which was founded in 2007 and now has more than 1 billion
auctions of advertising space each day, it said in a statement.
As consumers increasingly use smartphones and tablet
computers to watch videos and listen to music, traditional
broadcasters such as RTL and rivals including ProSiebenSat.1
, are expanding their online media offerings.
They encourage customers of their television services to
also use digital businesses, which include online videos, games,
music and fan communities on social network sites.
The deal with SpotXchange will give RTL Group direct access
to data about the media behaviour of a much younger audience.
These "Millennials", a term used to define people who were
born roughly between the early 1980s and early 2000s, are mostly
active on online platforms and less eager to get information via
traditional media such as television.
"For us this is a nice way to reach these so-called
Millennials," RTL's co-Chief Executive Guillaume de Posch told
Reuters. "It is a way to hedge our position, whether it is via
our online platforms or our linear TV channels."
A person familiar with the transaction said SpotXchange is
expected to make $40 million in sales this year, which would be
more than double last year's total.
BIG DATA ELEMENT
RTL said global online video advertising is currently the
fastest growing digital advertising segment and is expected to
grow at a compound annual growth rate of 24 percent between 2014
and 2018, to reach $24.8 billion.
This growth is driven by so-called programmatic video
advertising, the market SpotXchange is active in, which is
estimated to increase to $15.4 billion in 2018 from $2.7 billion
in 2013, according to RTL.
SpotXchange offers an electronic market place for online
video advertising, where software algorithms bring publishers
and advertisers together without a single person intervening.
Based on visitor data of the online video platforms, RTL
will be able to get a picture of the young customer and
customize its programme offerings. "In a way this acquisition
has a Big Data element," De Posch said.
RTL has been investing heavily in multi-channel networks on
YouTube, which resulted in 16.8 billion video views last year,
more than double the amount in 2012.
"We expect to more than double our online video views this
year again, reaching around 40 billion," De Posch said. "This
should keep us easily in the worldwide top 10 ranking of online
The acquisition of SpotXchange is expected to close at the
end of August. "They are not losing money," De Posch said
declining to give further financial details of the company.
(Editing by Catherine Evans)