Confirmed: Yahoo Is Acquiring Video Ad Company BrightRoll For $640M

Yahoo just announced that it’s acquiring video ad company BrightRoll for $640 million in cash.

We reported last month that a deal was in the works, with a price of around $700 million, but both companies declined to comment.

In a just-published blog post about the deal, Yahoo CEO Marissa Mayer said that video is one of the company’s key growth areas (along with mobile, social and native advertising), and that the acquisition will make Yahoo’s video ad platform “the largest in the U.S.” She also said that BrightRoll is profitable, receives 2 billion ad requests each day, and expects to bring in $100 million in net revenue this year (so the deal should have a positive effect on Yahoo’s earnings).

More broadly, Mayer wrote that online video advertising is becoming increasingly fragmented:

BrightRoll provides an effective solution aggregating high-quality publishers together into a unified network and utilizing programmatic advertising to allow real-time buying on the largest set of online video advertising inventory available. BrightRoll’s approach not only benefits advertisers and publishers, but also improves experiences for consumers, through better quality, more relevant advertisements.

BrightRoll was founded in 2006 by Tod Sacerdoti who is still its CEO. Neither the Yahoo press release nor the blog post say what Sacerdoti’s role will be post-acquisition — what Mayer wrote on that front was, “I’ve spent time with Tod Sacerdoti and his leadership team and I cannot wait to have him, his vision, and his team here at Yahoo.”

The company has raised $40 million in funding from investors including Adams Street Partners, Scale Venture Partners, Comerica Bank, True Ventures, Trident Capital, KPG Ventures, Michael Tanne, Fabrice Grinda, Auren Hoffman and Jeff Clavier, according to CrunchBase.

Update: I spoke to Sacerdoti and Scott Burke, Yahoo’s senior vice president of ad technology, about the deal. Burke agreed that this represents a big bet on video. In fact, he said this is Yahoo’s second biggest acquisition, after the $1 billion Tumblr deal.

He also said that this will combine Yahoo’s premium ad inventory and data with BrightRoll’s programmatic video ad marketplace. (And there’s a big opportunity on mobile, especially with Yahoo’s acquisition of Flurry.) Sacerdoti emphasized, however, that BrightRoll will continue working with non-Yahoo publishers – after all, that’s what its advertisers expect.

To illustrate the power of BrightRoll’s technology, Burke just pointed to the tremendous number of ads that the platform is already serving.

The 400-plus BrightRoll team will be joining Yahoo, as will the company’s management. Burke declined to specify what Sacerdoti’s title will be, except to say that he’s “coming in as BrightRoll CEO.”