Fox To Acquire TrueX For $200 Million

21st Century Fox (NASDAQ:FOX) has agreed to acquire the online advertising technology company TrueX Media for $200 million. ^[1] TrueX is behind the technology that offers to replace the usual advertisements in a video stream with one interactive ad. The deal with TrueX will help 21st Century Fox to drive ad engagement on its owned and operated digital platforms. Television, which for long has been the biggest advertising medium, has now peaked and will decline in coming years amid continued growth in digital platform, according to a research by ZenithOptimedia. ^[2] On that note, we discuss below this development and the recent trends in advertising marketplace.

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TrueX was founded in 2007 and offers advertisers a platform for digital premium content and engagement advertising. The company delivers ad units that are selected by the viewer in exchange for other usual advertisements. The TrueX ads require user participation for completion. The results are measured in engagement metrics, which is recorded by TrueX. The company provides ad space with publishers such as Tribune and media companies including, Pandora. The advertisers include Apple, Visa, Microsoft, Disney, Coca-Cola, Kraft and Nestle among others. Viacom (NASDAQ:VIA) is one of the big media companies considering implementing the TrueX ad technology across its digital platforms. ^[1] Post-acquisition, TrueX will continue to remain an independent company.

The overall advertising market is growing and advertisers are willing to shell out more money on advertisements. The North America ad-spend grew 4.60% in 2014, boosted by the Winter Olympics and mid-term elections and the region will see continued growth over the next few years. Television still remains the biggest medium for advertisements, close to 40% of all advertising. However, it is expected to drop to 37% by 2017, led by a rise in ad spending at other platforms, primarily digital desktop and mobile. ^[2]

Display ads is the fastest growing category with annual growth rate of as high as 18%. Given the technological advancements, the advertising formats are improving and Internet display ads are now more interactive and thus driving the attention of a viewer. ^[2] Some of the content owners bundle their advertising slots for television as well as digital platform. In such a scenario, having more interactive ads in place, such as from TrueX, will give a better marketing platform for advertisers and they will be ready to shell out more money for the same. This is why it makes sense for Fox to acquire TrueX and transform the viewing experience on its digital platform. The revenues at TrueX doubled by the end of second quarter this year, as compared to the prior year period. The company has seen staff growing three-fold in response to the rise in business. ^[3] TrueX claims that 52% of the users actively avoid ads and there is a need for consumer friendly ads. The solution could be engagement advertising, which can offer a better platform for advertisers to reach consumers. With TrueX’s existing deals and a massive digital advertisement market, the company can see exponential revenue growth in the coming years.

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1. 21st Century Fox to Acquire Ad Tech Firm TrueX for $200 Million, The Wall Street Journal, Dec 17, 2014 [↩] [↩]
2. Executive summary: Advertising Expenditure Forecasts December2014, ZenithOptimedia, December 2014 [↩] [↩] [↩]
3. Ad Fraud Creates Worry For Some, Opportunity For Others, AdAge, Apr 10, 2014 [↩]