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Digital ad firm Kargo is acquiring a video tech firm in a deal that could be worth $100 million to move into streaming TV ads

Kargo CEO Harry Kargman
Kargo CEO Harry Kargman Photo by Gary Gershoff/Getty Images

  • Adtech firm has acquired video company VideoByte.
  • The acquisition is aimed at giving Kargo inroads into the surging streaming TV ad market.
  • The deal could be worth $100 million if VideoByte hits an increased annual run rate this year.
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Advertising technology firm Kargo has acquired VideoByte, a video tech firm that helps advertisers make ads for streaming TV platforms.

Three-year-old VideoByte sells an ad server that lets advertisers run custom ads on streaming TV platforms. For instance, advertisers can position their watermarked logo or an image of their product in the corner of a TV screen while a show plays. Advertisers can also overlay QR codes on top of TV commercial to direct viewers to more information about an ad. VideoByte's technology targets ads based on what content someone watches or where they're watching. VideoByte's technology is used by Viacom, Tegna, and LG, according to Kargo. 

Kargo's business has traditionally focused on the mobile ad market. It has long sold software that makes animated banner ads and videos that appear on publishers' websites. The VideoByte acquisition will help it expand into selling streaming TV advertising, said CEO and founder Harry Kargman. US advertisers are expected to spend $9.5 billion on subscription-based streaming platforms this year — up from $6.3 billion last year — according to Insider Intelligence.

"This is a pretty big pivot for us and takes us on television screens," Kargman said.

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But Kargo faces tough competition for those lucrative streaming ad dollars. Kargo's competitors PubMatic and Magnite, for instance, have rapidly built out products that let publishers run ads in streaming TV platforms.

Kargo wants to differentiate by focusing on improving streaming TV creative, Kargman said. 

Kargman declined to disclose the exact terms of the deal, but said the VideoByte acquistion is priced in the low eight figures, and could be worth $100 million if VideoByte increases its annual run rate from $50 million to $75 million this year. He said that dealmakers have to be creative as adtech valuations have fallen in the past year. VideoByte's roughly 30 employees will join Kargo, giving the company 500 employees, Kargman said. 

As part of Kargo's move into streaming TV, the company has also hired Jennifer Pelino as chief strategy officer. Pelino will lead Kargo's go-to-market strategy with ad products and build bigger offerings for marketers that combine Kargo's mobile, web, and streaming products.

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VideoByte is Kargo's fourth acquisition within the past few years. In August, Kargo acquired digital video player Ziggeo to build out video products for publishers' websites and bought e-commerce firm StitcherAds to expand into social media in 2021.

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