Sorosh Tavakoli is the founder and CEO of Videoplaza. Here he discusses the recent the Videoplaza solution, the recent series B fund raise, and trends in the video ad market.
For those unaware of the Videoplaza proposition, can you give an overview of your solution?
We position Videoplaza as a sell side ad management platform for the New IP-delivered TV. This means that we empower broadcasters and publishers to maximise their advertising revenues from their IP-delivered videos, regardless of where and how that content has been consumed.
To do this, we’ve built our offering on three main pillars:
1. Expertise – with 4 yrs in the market, 60+ clients across 17 markets, delivering ads on 15+ devices and integrated with some 50+ partners - we often hear that the experience of our team is what does the trick for our clients.
2. Technology – the heart of our offering is our sell side ad management platform built from the ground to solve the challenges around monetising IP-delivered video, regardless of device or platform.
3. Service – we have a local team in six markets today, our team covers some 15 languages or so and we’re not afraid to get on a plane to meet clients. In the end, technology has no value without support from the right people.
And just to be clear, we are not trading media in any way: we are a technology platform 100% on the sell side.
You’ve just done series B round and raised $12 million. Will you look to move into new markets? Or build out your existing ad management solution?
We are doing both. Part of the new money will be used to accelerate our aggressive international expansion. While our key focus remains the key European markets, we know we have a strong proposition and have during the last years we’ve found a model to bring that to new geographies. We just signed a significant deal in Turkey for example and we’re seeing traction in South East Asia where we currently operate from Singapore.
Another area we’re investing significantly in is our technology. Consumer behaviour is changing rapidly not only on the PC, but also increasingly on non-PC devices. In Q4 2011 8% of our traffic was delivered on non-PC devices and in 2013, we believe that number will be more than 50%. This presents huge challenges for publishers who need to evolve their skill sets and business models to be effective in a multidevice reality. We believe technology will be key for successful monetisation and differentiation.
As a European ad tech vendor, has it been difficult to raise capital for development and expansion? Does there remain a knowledge gap between European investors and the native ad tech space here?
Ad tech is easily one of the fastest changing markets right now, marry it with video and your homework grows exponentially! So yes, there’s clearly a knowledge gap out there and it’s larger in Europe than in the US. This knowledge gap means we put more focus on actual client signings and revenue rather than hypothetical slides about how everything eventually will change.
With our leading position and the $160bn TV advertising market opportunity, we attracted significant interest from investors.
The online video market looks incredibly congested with middle-men tech solutions. How are you differentiating your proposition?
For some reason, we in the ad tech industry like to make things complex. I’ll try to give you my very simplified view on the topic of the different propositions in the market. We see three key propositions in the market. You can: help the sell side sell efficiently; help the buy side buy efficiently; and aggregate reach for the sell side (and help small publishers monetise).
As the buy side are beefing up their game, they are slowly but steadily aggregating reach themselves and thus threatening the middle-men. We are strong believers of this polarisation and have built our proposition on a sustainable sell side model.
Our proposition is 100% built for the sell side. There’s no confusion around whom we work for, therefore our incentives are completely aligned: we empower broadcasters and publishers with expertise, technology and service to maximise their advertising revenues.
Is the standardisation still a big issue in online video, such as video formats? Does this make it still incredibly difficult to buy across the channel?
Delivering ads in and around video content is a magnitude more complex than display. Publishers have different video players and delivering ads across different web sites has always been a challenge. The VAST standard has been very important for the market and adoption has taken off significantly the last 18 months. Delivering interactive ads is a different story. VPAID is the standard that promised to solve this but adoption has been low as it’s rather complex and risky to implement. If not sand boxed properly a VPAID ad can do pretty much anything with your player, opening up huge risks for a flawed user experience. As our platform has deeper integration with the publisher’s video player, our clients have always been compliant with all versions of VAST and VPAID. Managing this compliance in our platform and integrating with the video player hides a lot of complexity for our clients. Using a display platform, the responsibility is on the publisher to develop this functionality in their video players – which is complex and requires ongoing maintenance.
All of this is still about video on a PC. The question now is how to standardise across devices, technologies, apps and different screen sizes as we evolve into a device agnostic world.
CPMs remain high for video advertising. And more publishers seem to be gravitating their content businesses toward online video to take advantage of the big media buying budgets. Is this the future for the publisher business?
What is happening right now is that many (non-broadcast) publishers’ dreams are coming true – they can suddenly access the holy grail of $160bn TV advertising budgets. The video revenue of Sweden’s largest tabloid Aftonbladet is close to some of the broadcasters in the same market; Google/Youtube has already built a power house in the new TV space; and many others who historically had no access to the these budgets are trying to do the same. The rules of the game are changing and many media companies will find their next $10m opportunity here.
How will Videoplaza work with agency trading desks looking to buy inventory via RTB or the automated channel? Are there plans to roll out new solutions to address automated demand?
Videoplaza works predominantly with broadcasters and premium publishers. We are following the evolution of automated trading closely and constantly discussing it together with our clients. So far, the feedback has consistently been that it’s too early. Video is traded on brand metrics, and context plays such an important role that some of the trading methods build for display need to be evolved. Also, the lack of supply isn’t really pushing for this right now. This might change in the coming 12-24 months and we’re ready to push out the functionality when needed.
What trends are we likely to see in the European video ad market over the coming 12 months?
2012 will be one of the most important years for the new IP-delivered TV. I’ve picked out three key trends we see that are relevant for publishers.
1. The inventory gap drives CPMs and spurs innovation
We are likely to see continued lack of supply in the market and this will have numerous implications. There will be many innovative ways to create inventory. There is a huge increase in syndicators, aggregators, in-banner/in-stream hybrids, IP only productions companies etc. popping up to fill the video inventory gap. I believe we will increasingly see prerolls before casual games solve this problem. Publishers like King.com, Spillgames and Stardoll are all good examples of this. We’re also predicting rather stable, if not growing, CPM levels in the market.
2. Live content attracts big audiences and ad spends
The Super Bowl last week was the most popular live-streamed event so far with about 2 million unique users watching it live over IP. Live content is another way to fill the inventory gap for broadcasters and publishers. Advertisers love live events, concerts and sports; and the mobility of IP-delivered devices, especially mobile, is driving the audience.
Monetising live content is challenging though. There are millions of users to dynamically deliver ads to simultaneously and in real time. This has complications not only for ad decisioning but puts also massive pressure on the infrastructure to deliver this.
3. Video grows outside of the PC
2011 was the year when broadcasters and publishers realized that the future of video is not limited to the PC. 2012 will be the year they act on this insight by investing seriously in new services and apps. Figuring out the business models will be key to this development, as the investment need to be motivated by clear financial gain.
Different devices and platforms will be important in different markets. However, we see a key trend towards HTML5, iPhone, iPad, Android, and then a mix of platforms for the living room. Games consoles have a massive reach already and are usually Internet connected; Smart TVs are also coming on strong with heavy artillery, even though penetration is lower. Control and flexibility will be key for the success of these platforms as publishers will want to stay in control, especially of the monetization.
This massive opportunity comes also with a number of challenges, especially on the technology side. We are preparing for that with a major product announcement in this area in March.