German media company RTL Group released its Q3 results today where it announced that it plans to merge its two ad tech businesses, SpotX and smartclip, into one new company by the end of 2018. The move is part of RTL’s ‘Total Video Strategy’, which has seen the group invest heavily in ad tech and commission more original programming. RTL credits this strategy, along with strong growth of its French and German broadcasters, for fuelling record Q3 revenue; the Q3 results showed that revenue was up 1.5 percent year on year, reaching €1,372 million, and January to September revenue increased 2.8 percent compared to last year.
RTL bought smartclip in 2016 and finalised its buyout of SpotX last month, and says that the two have been increasingly collaborating under RTL’s leadership. Now it wants to consolidate the ad tech branch of its business, with Co-CEOs Guillaume de Posch and Bert Habets saying the merger will speed up progress towards their goal of creating a “global and independent monetisation platform for broadcasters, video-on-demand services and publishers”.
The new company will see current SpotX execs Mike Shehan and Steve Swoboda take the CEO and CFO roles respectively, with smartclip’s Jean-Pierre Fumagalli and Roland Schaber running European operations. According to an RTL statement, it will focus on “ad-server development, addressable TV,” and “bringing dynamic ad-insertion capabilities in house”, aiming to cater to customers’ “total video needs”.
Currently, SpotX and smartclip offer many of the same services, but Shehan says the two are complementary, “with each company bringing something unique to the market (e.g. smartclip’s addressable TV offering or SpotX’s video header bidding solution)”. The new business wants to play to these strengths: while SpotX will be the global brand for the combined company, smartclip branding will be maintained for some regional activities in Europe where it is already well established, and for some specific products and services.
Shehan also says the scale provided by the merger will put the new company in a strong position, uniting the sales efforts of the two and aligning their strategies. SpotX and smartclip will build a fully integrated ad tech stack which RTL says will allow it to maintain control of its ad sales, and the two will develop a joint go-to-market approach with local RTL broadcasters and their sales houses.
RTL believes its ambitions for its ad tech arm will be best met with more purchases and partnerships, meaning we might expect to see the new SpotX swallow up more ad tech outfits in the near future. RTL says that the new merged company will work closely with VideoAmp and Clypd, two of the Group’s minority shareholdings, and it will be scaled through further acquisitions and partnerships, though there were no indications yet of the sort of tech RTL is looking to buy.
German rival ProSiebenSat.1 also released its Q3 results this week, reporting year-on-year revenue growth of three percent, which it too attributed in part to growth of its ad tech arm, which includes a majority stake in Virtual Minds. Earlier this year, we saw ProSiebenSat.1 push for great cooperation between the big European broadcasters through its joint venture, the European Broadcaster Exchange (EBX) with Mediaset (Spain and Italy) and TF1 (France). ProSiebenSat.1 CEO Thomas Ebeling, discussing the Q3 results in a conference call, says he doesn’t rule out further European industry consolidation, though he says his company is not positioning itself as a buyer and no mergers are currently on the cards.