Here’s Why NewsCorp Is Investing In AppNexus

October 5th, 2016 by Trefis Team
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A few months ago, News Corp‘s (NASDAQ:NWSA) captive video tech company Unruly entered into a partnership with AppNexus,  a company with technology to optimize programmatic online advertising.  In a further commitment, the parent company has now invested $ 10 million in the AppNexus. With this investment, News Corp will  get access to AppNexus’ full suite of technology products from ad serving to analytics. Some of the company’s brands already use AppNexus’ products and are benefiting from its services. Managing ad inventory programmatically makes the process of buying and selling ads more efficient and cheaper for advertisers.  And AppNexus has a technological edge in this space. News Corp can benefit from this as it expands into the digital advertising market. With its investment in AppNexus, the company can gain a competitive edge.

See our complete analysis for News Corporation

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Bolstering Digital Real Estate and Unruly’s Offerings

News Corp plans to use AppNexus’ products for its digital real estate segment, which is its fastest growing division. In Q4 2016, this segment registered a 21% year-on-year increase in revenues. Through AppNexus’ products, advertisers will get access to better technology to programmatically advertise on this platform.  And this should drive advertising revenues for News Corp. According to our estimates, the digital real estate segment accounts for nearly 20% of News Corp’s valuation and we expect revenues from this segment to increase steadily from around $1 billion in 2016 to nearly $1.5 billion by the end of our forecast period.

A faster growth in these revenues can lead to an upside in our price estimate.

Through the current investment, News Corp is also looking to expand the partnership between Unruly and AppNexus. Currently the Unruly inventory available on AppNexus’ platform consists of the outstream format. The two companies plan to expand the formats available to AppNexus’ video buyers to include vertical video.  They also plan to collaborate on “Vertical Video Collective” a network of mobile-first content creators specializing in creating video for vertical viewing.  As AppNexus’ products create a positive impact on News Corp, it appears that the company is moving away from Google’s publisher ad tech platform Google DoubleClick. As programmatic ad buying makes the process more efficient and cheaper, better technology can drive revenues for publishers such as News Corp. Investing in a platform known for its products in this space can give News Corp a competitive edge and benefit several of its businesses. We believe the company’s investment in AppNexus can give NewsCorp the technology edge and drive advertising revenues over the long term.

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