blinkx, the San Francisco-based video search engine, has taken a big leap into the online advertising business—and expanded its operations to the Boston area in the process.
The company said today it has acquired Burlington, MA-based Burst Media, which manages an online advertising network catering to niche or “long tail” Web publishers. Burst distributes ads to sites such as Politico, Sidereel, Slant Magazine, Snopes.com, Ikeafans, and MomsWhoThink, bringing the company some $37.7 million in revenue in 2010.
Both company’s shares are publicly traded on the London Stock Exchange. blinkx said in a lengthy regulatory disclosure that it bought Burst for $30 million in stock and cash, and that it expects the acquisition to start adding to its own earnings immediately.
The majority of Burst’s management team will remain at the combined company. But Burst CEO Jarvis Coffin and chief technology officer David Stein, who co-founded the firm together in 1995, will both depart after a short time in “temporary roles to assist transition,” according to blinkx.
Burst doesn’t have any huge, marquee sites in its publisher network—but that’s the point. By serving a group of about 50 smaller, independent sites, the company reaches more than 130 million unique users, according to metrics from comScore. Overall, it ranks as the 36th largest U.S. media property on the Internet.
blink’s special talent, meanwhile, is for analyzing large amounts of Web video and understandings its content algorithmically. Its index includes more than 35 million hours of video. The company says it will be able to use its understanding of that content to create new video channels featuring topical videos for each of the sites in Burst’s network.
That, in turn, will help build up the audiences blinkx’s own advertisers can reach, and, in theory, allow it to sell more of its own lucrative video pre-roll ads, which are shown to viewers at the beginning of other video content. blinkx said the display banner ads currently sold through Burst’s network bring in an average of $1.49 per thousand impressions. blinkx’s pre-roll ads, by contrast, bring in $20 per thousand impressions.
“blinkx believes that the combined group will be able to realize some of the differential between these two rates and share the resulting value with its publishers through combining the scale of Burst’s network with blinkx’s video products,” the company said in a statement. “Given this should also deliver an improved, richer experience for end users, blinkx believes the combination will represent a win-win-win proposition for users, publishers and advertisers.”
blinkx CEO Suranga Chankratillake could not be reached for direct comment on the acquisition. In today’s announcement, however, Chandratillake said he expects that combinations such as that between blinkx and Burst will make it easier for online video networks to compete against TV networks for advertising dollars.
“Up until now, the primary barrier to further television advertising budgets moving online has been online video’s inability to match the sheer scale of audience that television can deliver,” Chandratillake said. “We are extremely excited about the acquisition as it will allow us to overcome that challenge: by fusing blinkx’s unique patented technology and large video index with Burst’s massive reach, we will have the potential to create personalized, online television that is watched by hundreds of millions of users.”