Tout has raised a $26 million Series C round led by the Melohn Group, with new investors Windsor Media, Pittco Capital Partners and HL Capital, along with existing investors Seavest Capital, 819 Capital and the WWE. Michael Downing, Tout’s founder and CEO, told me in a briefing that it was an up round and was oversubscribed. Including the new round, Tout has raised $40 million.
Tout has flown relatively below the radar, but has made significant progress toward building out a classic “syndicated video economy” business, distributing premium video from over 230 different content providers including CNN, Fox Sports CBS, Scripps, Bloomberg and other to over 2,800 different publishers’ sites including Salon, Breitbrart, Independent Journal Review and others. Michael said that Tout now ingests 5,000-7,000 videos per day and drives 380M video views from 57 million unique viewers per month.
Tout was founded with technology spun out of Stanford Research Institute (SRI), enabling deep analysis of web pages and algorithms that match and insert relevant videos. Michael stressed that the videos are integrated in editorial positions rather than traditional ad slots. Upon signing a new publishing partner, Tout analyzes the site’s page templates and agrees with the publisher where videos will be slotted.
Tout is now inserting video on 35-40 million article pages per day. Michael said that publishing partners have seen page revenue per impression (RPM) lift of 6-10x by working with Tout. Content providers typically pre-negotiate how much they’ll pay on a CPM basis to Tout for the additional audience reach. Rates are usually in the teens, which Tout then splits with the publisher getting 35%-50%. Content providers are able to sell the extended audience for $28-$35 CPM.
Tout’s business model works well because it’s a win for all participants. Traditional text-based publishers eagerly want to tap into video ad spending, but creating highly professional video, at scale, is difficult and expensive. As well, Michael noted that with limited resources, executing with traditional OVPs can be challenging for publishers. So being able to access premium video from branded partners that also brings along immediate, high margin revenue, is very valuable.
Conversely, premium content providers want to expand their audience base in order to increase revenues. With more and more consumption happening outside of owned sites, Tout enables content providers to double and triple their reach, while controlling which sites can access video.
In this context, Michael described Tout’s role as really a big data engine, constantly trying to optimize the matching of premium video with distribution in order to increase revenue for all and provide better user experiences. Clearly the approach appears to be working: 2015 revenue was $4 million, which will increase to $12 million this year. 2017 is forecast at $45-50 million. Importantly, Tout will be profitable in Q4 ’16 for the first time.
Tout is a great example of how different the dynamics are in online video vs. TV are. Whereas in TV, everything is about driving eyeballs to an owned, branded channel, with online video, the key is distributing and monetizing video as widely as possible.
Going forward, Michael sees Google entering the syndicated video business as a natural extension of AdSense. But he sees this as a positive as it would help bring more credibility to the market. He’s also excited to ramp up the distribution of live video across the publisher network which recently launched. Just last week Tout distributed CBS’s presidential debate feed across its network with over 1 million viewers tuning in.
The new funds will be used to expand publisher biz dev and sales, enhance audience targeting for content providers and expand into international. Tout seems very well positioned to continue growing as all the macro industry trends are behind it.