Adobe Stock

Adobe Systems Inc. (Nasdaq: ADBE) is buying video advertising network TubeMogul Inc. (Nasdaq: TUBE) for nearly $540 million as digital media consumption continues to increase. The deal, expected to close in the first quarter of 2017, will form a separate platform under Adobe’s digital marketing division.

TubeMogul designs software for brands and marketing agencies to advertise across linear television, social media and all multimedia video formats. Clients can plan, buy, optimize and measure the success of their advertising campaigns using the target’s technology. Adobe and TubeMogul share a list of joint clients that include: Allstate Corp. (NYSE: ALL), Johnson & Johnson (NYSE: JNJ), Kraft Heinz Co., Liberty Mutual Holding Co. Inc., L’Oréal SA, Nickelodeon and Southwest Airlines Co. (NYSE: LUV). CEO Brett Wilson will continue to lead the TubeMogul team under Adobe.

“Whether it’s episodic TV, indie films or Hollywood blockbusters, video consumption is exploding across every device and brands are following those eyeballs,” states Brad Rencher, executive vice president of digital marketing at Adobe.

Adobe is a digital software company servicing the media, marketing, and print and publishing industries. The deal will allow the buyer to build upon its Adobe Media Optimizer, a platform for managing online advertising campaigns with performance prediction analytics. Customers will now be able to maximize their advertising dollars across desktop, mobile, streaming devices and television. In 2014, Adobe began shifting its business model away from one-time software purchases to cloud-based subscriptions. The buyer's cloud-based products include: Acrobat, After Effects, Audition, Dreamweaver, InCopy, Lightroom, Illustrator, Premiere Pro, and most notably Photoshop.

Video marketing and advertising companies have been receiving some interest from dealmakers recently as consumers continue to migrate toward mobile devices and digital media. Related deals include: Kohlberg & Co. LLC’s agreement to purchase a majority stake in MarketCast LLC., a data analytics provider for the entertainment industry; Web.com Group Inc.’s (Nasdaq: WEB) purchase of online marketer Yodle Inc. for nearly $342 million in cash; and HGGC’s acquisition of online marketing research company Instantly. DLA Piper LLP is serving as legal counsel to TubeMogul.

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