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Video search giant blinkx is getting closer to becoming a broadcaster, extending its content reach to the advertising community with the acquisition of Burst Media for US$30m.

The merger will bring blinkx’s vast data bank of 35 million hours of online video and TV to Burst’s claimed audience of over 130 million unique users.

CEO of blinkx, Suranga Chandratillake, says that by fusing his company’s technology and large video index with Burst’s massive reach “we will have the potential to create personalised, online television that is watched by hundreds of millions of users”.

The strategy will include the creation of contextually relevant video channels for Burst’s network of online publishers. The targeted web channels aims to aggregate an online video audience for advertisers across long tail internet sites, which arguably rival the scale of television networks.

The reach of Burst’s network of publishing partners extends to 61% of the US online population.

“In just a few years, we have seen online video advertising become the fastest growing segment of online advertising. Up until now, the primary barrier to further television advertising budgets moving online has been online video’s inability to match the sheer scale of audience that television can deliver. We are extremely excited about the acquisition as it will allow us to overcome that challenge,” Chandratillake said.

Currently, display banner advertising sold on Burst’s networks attracts an average CPM of US$1.49, while blinkx's standard, untargeted video pre-rolls were priced at a CPM of US$20 during 2010, reflecting the demand for highly targeted video advertising products.

blinkx believes that the combined group will be able to realise some of the differential between these two rates and share the value with its online publishers. It expects the acquisition to have a future revenue run rate of US$33 to $34m, kicking in from the year ending March 2012. ®

Top three mobile application threats

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