RTL to unleash new SpotX on Europe, once in-house ad tech is revamped

European entertainment heavyweight RTL Group can soon begin flaunting the ad tech force at its fingertips, as the merger of SpotX and Smartclip completed this week. What makes the merger more interesting is the knowledge of RTL recently terminating its ad tech contract with OTT technology vendor Ooyala, suggesting the new outfit will first be tasked with overhauling RTL’s in-house advertising systems, before expanding the SpotX brand to broadcasters across Europe.

The platform is initially being deployed at German commercial broadcaster Mediungruppe RTL Deutschland in March, supplying an all-in-one ad serving and programmatic platform for reaching various connected screens. Through RTL and Smartclip, SpotX has reportedly expanded its footprint by 40% outside of the US – but the European advertising landscape is considered more stringent than the US and therefore a tougher nut to crack.

Yet SpotX and Smartclip seem to be growing while other vendors in the advertising industry are struggling to break through. Of course, operating as a subsidiary of a major broadcaster helps, but Ooyala’s recent $500 million+ write down and ad tech unit closure, by parent company Telstra, is a prime example of the difficulties in this market which even a cash-rich parent cannot always provide protection from.

Like many other budding ad tech firms, SpotX has been targeting the growing connected TV market. Most connected TV ad inventory today is available in private marketplaces, but various ad tech suppliers are getting their hands on connected TV programmatic inventory.

RTL, which is majority owned by German media conglomerate Bertelsmann, acquired the remaining 36.4% of SpotX it did not already own for $145 million in August last year, valuing the video ad serving company at $404 million. The plan is to merge the assets of SpotX with the technologies of Smartclip, the online ad serving company RTL bought for $55.8 million in 2016, to survive the “challenging development” of TV ad markets.

RTL says the close collaboration between SpotX and Smartclip will involve rolling out joint services across its operations, which could range from growing the online ad footprint of British production firm FremantleMedia, to building a programmatic ad strategy for French holding company Groupe M6 – two of many companies owned by RTL, Europe’s largest broadcaster.

The new company will operate mainly under the SpotX brand but maintain the Smartclip name in certain markets, creating a company with over 550 employees in 18 additional markets in Latin America and Europe. But while the SpotX name and platform takes the spotlight, Smartclip’s inventory and partnerships should be given credit where credit is due. Smartclip aggregates ad inventories of around 700 publishers and integrates these ads into content for delivery to internet-connected devices – including smart TVs through major ad deals with Philips, LG and Samsung.

A recent technology upgrade from SpotX shows the company is preparing for a cloud-based media future, now powering server-side insertion for streaming video ads with the AWS Elemental MediaTailor, a personalization and monetization service for targeted ads on multiscreen video apps.

SpotX co-founders Mike Shehan and Steve Swoboda will remain as CEO and CFO respectively of the new company, which is expected to complete the combination of operational business later this year.

“In the ‘total video’ industry, scale matters and the combination of SpotX and Smartclip will enable us to compete more effectively in the dynamic programmatic video landscape, enhancing the enormous, exciting potential of our best-in-class technology platform, products, and services. The results speak directly to our company-wide commitment to making our clients and partners successful and combining the strengths of two great companies with a common goal. This is a key element in RTL Group’s ‘Total Video’ strategy,” said Shehan.