Thanks to the increasing consumption of digital video — and the fact that many of the largest content providers now force viewers to watch ads within those videos (Hulu, YouTube) — the growth of digital video continues to be one of the fastest growing areas of the online advertising market. Naturally, that rising tide (which is expected to continue) has begun to carry a handful of the veteran video-ad networks towards the public markets.
Last week, Tremor Video filed for its “long-awaited public offering” on over $105 million in revenue in 2012, for example. YuMe and Adap.tv are also on the list of potential IPO candidates in 2013 thanks to strong growth forecasts, Bloomberg reports. And the list of growing video-ad networks goes on — unfortunately for Google.
Today, it looks as if the online video ad market could be close to sending another veteran into the fray of the public markets. Although it’s keeping its cards close to its chest on that front, Videology announced today that it has closed a whopping $60 million round of Series D financing, led by Catalyst Investors. The company’s previous investors, including NEA, Valhalla Partners and Comcast Ventures also contributed to the round, along with Pinnacle Ventures, a Videology first-timer.
While CEO Scott Ferber said today that the company plans to use its new capital to ramp up international growth and invest more aggressively in its tech infrastructure and services, it’s also worth noting that the round brings Videology’s total outside investment to about $121 million. That puts it on par with Tremor Video, which had raised $116 million when it announced its plans to IPO.
Since its founding in 2007, Videology has grown to operate in 12 countries and now runs campaigns for 900 brands each year, in what it says has resulted in a “three-year CAGR of 190 percent.” But why, you ask? Simply put, Videology is a video platform that allows brands, agencies and media companies to plan, serve, manage, and monitor video ad campaigns. The key, however, is that the platform provides advertisers and marketers with specifications and features that are familiar to the TV world, while offering the more advanced targeting, optimization and analytics of digital media.
The company has gone through several incarnations over the years, beginning as an ad server and video content network, before shifting to a broadband network and adding this video advertising marketplace that aims to connect online video and TV, according to AdExchanger.
But we still have a while before TV, desktop and mobile advertising fully converge and true cross-channel advertising in all its forms hasn’t yet hit maturity, so for now Videology is hitting its stride thanks to the traction it has built up as a video ad server and distribution network. Meanwhile, AdExchanger reports, the company has also begun to expand into the supply-side, providing publishers with video content as well — covering its bases.
With the sale of video ad inventory becoming more automated and platforms likely to find it increasingly challenging to distinguish themselves from each other as a result, Videology has been making an effort to diversify. Today, it’s drawing revenue from each arm, but tomorrow the most successful video ad networks will either be those with the best or most premium content, or those that have developed the most effective and frictionless way to connect those buyers and sellers, i.e. a marketplace.
Of course, it’s not all sunshine and roses. We’re moving into what could be a time of significant flux in digital video advertising. YouTube qua Google is really player against which everyone else is measured, as it owns nearly one-third of the market. As a result, how it decides to structure its business model can a big impact on the market itself. For example, YouTube is toying with a subscription model, which (if it goes that way) would naturally put it in Netflix’s camp, while the other big player, Hulu, is solely ad-supported.
The last few years of growth have minted a number of sizable digital video ad networks, but the changes in the market, consumption patterns and some of the infrastructure of these networks themselves may not be kind to all players. Plus, at least for the foreseeable future, this is Google’s World. Nonetheless, Videology believes it is positioning itself in a way that will allow it to take advantage of whatever comes out of the flux in the marketplace. And $60 million in new capital to expand abroad and build out the right pieces certainly helps.
by Rip Empson