VideoNuze Posts

In Q4 '09, private U.S. broadband and mobile video-related companies raised at least $150.1 million according to company news releases I received and public sources I track. At least 21 private companies disclosed financings in the quarter, ranging in size from $1 million each for Howcast and Mochila to $25 million each for Dailymotion and Delivery Agent. Vevo's raise from Abu Dhabi Media Company, which was not disclosed, may well have exceeded these. Companies across the ecosystem, including services, chips, advertising, DRM, content, analytics and platforms were represented.

The quarterly total was the second best of 2009, following Q3 ($180.9 million). When added to Q1 ($74.8 million) and Q2 ($64 million), it brings the 2009 total to just under $470 million, raised by 64 companies. The relative strength of investments in the sector underscores investor enthusiasm broadband and mobile video despite the ongoing recession and credit squeeze. (Note the quarterly total doesn't include the $2 billion+ private placements that Clearwire, the 4G network provider, announced in Q4 or the $40 million raise that Chinese portal Youku just announced yesterday, nor any other international deals).

In addition to private financings, there were noteworthy deals announced in Q4 as well. At the top of the list is of course Comcast-NBCU, valued at $30 billion. Another significant deal announced in the quarter was Cisco's acquisition of Tandberg, a Norwegian videoconferencing company for $3.4 billion. On a smaller scale, there was Limelight's plan to acquire rich media ad firm EyeWonder for $110 million just yesterday, AEG's acquisition of webcaster Incited Media, Adconion buying the remains of Joost and KIT Digital's rollup of competitors The FeedRoom and Nunet.

Following are the investments that I tracked during the quarter, the date disclosed and new investors identified if applicable. Links are provided to the companies' press releases, or to relevant media coverage if none could be found (note that I haven't verified media coverage with companies themselves). If I've missed anything or you find an inaccuracy, please post a comment.

VMIX ($2M) Oct 1 - Existing investors

Delivery Agent ($25M) Oct 1 - Focus Ventures, existing investors

Howcast ($1M) Oct 5 - Undisclosed investors

Visible Measures (Undisclosed) Oct 6 - DAG Ventures

Personal Web Systems ($1.2M) Oct 7 - Undisclosed investors

ViVu ($3M) Oct 13 - Inventus Capital Partners, DFJ, Quest Ventures

Ooyala ($10M) Oct 13 - Rembrandt Venture Partners, existing investors

Vevo (Undisclosed) Oct 19 - Abu Dhabi Media Company

Dailymotion ($25M) - Oct 22 - French Sovereign Fund, existing investors

Dilithium Networks ($10.9M) - Oct 27 - Existing investors

Vdopia ($4M) Oct 28 - Nexus Venture Partners

ScanScout ($8.5M) - Oct 28 - EDB Investments

Sezmi ($25M) Nov 16 - Existing investors

Zorap ($1.4M) Dec 1 - Angel investors

VisibleGains ($2M) Dec 2 - Existing investors

Mochila ($1M) Dec 7 - Existing investors

Widevine ($15M) Dec 14 - Liberty Global, Samsung

Cloud Engines ($3M) Dec 14 - Undisclosed

Ace Metrix ($6M) Dec 16 - Leapfrog Ventures, existing investors

Jinni ($1.6M) Dec 16 - DFJ Tamir Fishman Ventures

Quantenna ($4.5M) Dec 17 - Existing investors

As 2009 winds down, in the spirit of accountability, it's time to take a look back at my 5 predictions for the year and see how they fared. As when I made them, they're listed below in the order of most likely to least likely to pan out.

1. The Syndicated Video Economy Accelerates

My least controversial prediction for 2009 was that video would continue to flow freely among content providers numerous third parties, in what I labeled the "Syndicated Video Economy" back in early 2008. The idea of the SVE is that "destination" sites for online audiences are waning; instead audiences are fragmenting to social networks, mobile devices, micro-blogging sites, etc. As a result, the SVE compels content providers to reach eyeballs wherever they may be, rather than trying to continue driving them to one particular site.

Video syndication continued to gain ground in '09, with a number of the critical building blocks firming up. Participants across the ecosystem such as FreeWheel, 5Min, RAMP, YouTube, Visible Measures, Magnify.net, Grab Networks, blip.TV, Hulu and others were all active in distributing, monetizing and measuring video across the SVE. I heard from many content executives during the year that syndication was now driving their businesses, and that they only expected that to increase in the future. So do I.

2. Mobile Video Takes Off, Finally

When the history of mobile video is written, 2009 will be identified as the year the medium achieved critical mass. I was bullish on mobile video at the end of 2008 primarily due to the iPhone's success and my expectation that other smartphones coming to market would challenge it with ever more innovation. The iPhone has continued its amazing run in '09, on track to sell 20 million+ units. Late in the year the Droid, which Verizon has relentlessly promoted, began making inroads. It also benefitted from Verizon highlighting AT&T's inadequate 3G network. Elsewhere, 4G carrier Clearwire continued its nationwide expansion.

While still behind online video in its development, mobile video is benefiting from comparable characteristics. Handsets are increasingly video capable, just as were computers. Mobile content is flowing freely, leaving the closed "on-deck" only model behind and emulating the open Internet. Carriers are making significant network investments, just as broadband ISPs did. A range of monetization companies have emerged. And so on. As I noted recently, the mobile video ecosystem is healthy and growing. The mobile video story is still in its earliest stages, we'll see much more action in 2010.

3. Net Neutrality Remains Dormant

Given all the problems the Obama administration was inheriting as it prepared to take office a year ago, I predicted that it would not expend energy and political capital trying to restart the net neutrality regulatory process. With broadband ISP misbehavior not factually proven, I also thought Obama's predilection for data in determining government action would prevail. However, I cautioned that politics is a tough business to predict, and so anything can happen.

And indeed, what turned out is that in September, new FCC Chairman Julius Genachowski launched a vigorous net neutrality initiative, despite the fact that there was still little data supporting it. With backwards logic, Genachowski said the FCC would be guided by data it would be collecting, though he was already determined to proceed. In "Why the FCC's Net Neutrality Plan Should Go Nowhere" I argued, among other things, that the FCC is way off the mark, and that in the midst of the gripping recession, to risk the unintended consequences that preemptive regulation carries, was foolhardy. Now, with Comcast set to acquire a controlling interest in NBCU, net neutrality advocates will say there's even more to be worried about. It looks like we can expect action in 2010.

4. Ad-Supported Premium Video Aggregators Shakeout

The well-funded category of ad-supported premium video aggregators was due for a shakeout in '09 and sure enough it happened. Players were challenged by little differentiation, hardly any exclusive content and difficulty attracting audiences. The year's biggest casualty was highflying Joost, which made a last ditch attempt to become a white label video platform before being quietly acquired by Adconion. Veoh, another heavily funded player, cut staff and changed its model. TidalTV barely dipped its toe in the aggregation waters before it became an ad network.

On the positive side, Hulu, YouTube and TV.com continued their growth in '09. Hulu benefited from Disney coming on board as both an investor and content partner, while YouTube improved its appeal to premium content partners and brought on Univision and PBS, among others. Aside from these, Fancast and nichier sites like Dailymotion and Babelgum, there isn't much left to the aggregator category. With TV Everywhere services starting to launch, the opportunity for aggregators to get access to cable programming is less likely than ever. And despite their massive traffic, Hulu and YouTube have significant unresolved business model issues.

5. Microsoft Will Acquire Netflix

This was my long ball prediction for '09, and unless something happens in the waning days of the year, I'll have to concede I got this one wrong. Netflix has remained independent and is charging along with its own streaming "Watch Instantly" feature, now used by over half its subscribers, according to recent research. Netflix has also broadened its penetration of 3rd party devices, adding PS3, Sony Bravia TVs and Blu-ray players, Insignia Blu-ray players this year, in addition to Roku, XBox and others. Netflix is quickly becoming the most sought-after content partner for "over-the-top" device makers.

But as I've previously pointed out, Netflix's number 1 challenge with Watch Instantly is growing its content selection. Though it has a deal with Starz, it is largely boxed out of distributing recent hit movies via Watch Instantly by the premium channels HBO, Showtime and Epix. My rationale for the Microsoft acquisition is that Netflix will need far deeper pockets than it has on its own to crack open the Hollywood-premium channel ecosystem to gain access to prime movies. For its part, Microsoft, locked in a pitched battle with Google and Apple on numerous fronts, could gain advantage with a Netflix deal, positioning it to be the leader in the convergence era. Meanwhile, others like Amazon and YouTube continue to circle this space.

The two big countervailing forces for how premium video gets distributed in the future are TV Everywhere, which seeks to maintain the traditional, closed ecosystem, and the over-the-top consumer device-led approach, which seeks to open it up. It's hard not to see both Netflix and Microsoft playing a major role.

What do you think? Post a comment now.

Following are 4 items worth noting for the Dec 14th week:

1. New pre-roll data shows format's strength - Though many in the industry still scorn the pre-roll ad, this week 2 ad networks, ScanScout and YuMe, released data showing its continued prevalence as well as innovation that's improving its performance. ScanScout said its "Super Pre-roll" unit, which allows for integrating overlay graphics on the video that viewers can engage with, is driving 350% higher click-through rates compared with typical pre-rolls. In this example for Unilever's Vaseline, note how the creative nicely reinforces the messaging. The enhanced interactivity feels like the start of a new trend; another pre-roll that offers something similar is Innovid's iRoll unit. ScanScout separately announced this week a host of new premium publishers have joined its network.

Meanwhile YuMe released its Video Advertising Metrics Report for Jan-Nov '09, which showed that, at least within YuMe's network, 90%+ of all ads served were pre-rolls, with 30 second spots generating a 1.8% overall click-through rate, a 50% higher rate than the 1.2% that 15 second spots achieved. The volume of 30 second ads also grew 50% faster than 15 second volume in Q3 '09. Kids age 6-14 achieved a 3.7% click-through rate, the highest of any group, which YuMe's Jayant Kadambi told me could be explained by the more engaging nature of child-focused ads (e.g. click to play games, etc.). Jayant believes the sizable amount of existing creative for TV ads that can be easily repurposed for online is a key reason pre-rolls continue to dominate.

2. Paramount clipping site powered by Digitalsmiths is slick - I was impressed with a demo of Paramount Pictures' newly launched ParamountClips.com site that I got this week. The site is only open to Paramount's business partners, allowing them to either choose from an existing stock of clips from over 80 different Paramount movies, or to easily create their own. Desired clips are moved into a shopping cart and released for download, per previously determined licensing terms.

The site is powered by Digitalsmiths, which indexed all of the scenes from the movies using their proprietary recognition process, and then generated meta-data for each, which makes searching a snap. The new self-service site replaces the laborious previous process of a Paramount staffer working with each partner to extract jus the scene they want. As a result, a new highly-scalable licensing opportunity has been created. Paramount is taking advantage of Digitalsmiths VideoSense 2.5 release announced last week that is focused on clip generation, for both on demand and live streams, improved asset management and more integrated reporting.

3. Thwapr launches beta of mobile-to-mobile video sharing - Continuing the buildout of the mobile video ecosystem, Thwapr, a new mobile-to-mobile content sharing platform, launched its beta this week. Duncan Kennedy, Thwapr's COO told me that although there's been a proliferation of video capable smartphones, there's currently no easy, fool-proof way of sharing videos from one device to another (e.g. from an iPhone to a BlackBerry). Enter Thwapr, which lets the user upload videos to Thwapr and then have them shared with their contacts. Thwapr identifies the receiving phone's "user agent" so that it can dynamically decide the optimal format the video should be viewed in. The user simply clicks on a link and the video plays. I can attest that it worked beautifully on my BlackBerry Pearl.

Thwapr's raised about $3 million from angels and has a very strong team, including Duncan and others who worked on Apple's QuickTime. I'm a fan of how video, social/sharing and mobile intersect to create new opportunities, though there are business model unknowns. For now Thwapr is focused on a free ad-supported model, with a particular emphasis on geo-tagging videos to make advertising especially appealing for local merchants. Still, YouTube has illustrated how difficult it is to monetize user-generated content. Thwapr also envisions a business-grade option for real estate, travel, dating type applications which sound promising. I wonder too about whether a freemium model should be explored, though Duncan said Thwapr's analysis suggested this would be a relatively small opportunity. We'll see how things shape up.

4. Next week is 2009 wrap-up week on VideoNuze - Keep an eye on VideoNuze next week, as I'll be summarizing Q4 '09 venture capital investments and deals in the broadband/mobile video space, reviewing my 2009 predictions and looking ahead to what to expect in 2010. It's been an incredibly active year and based on the pre-CES briefings I've been doing, there's lots more to look forward to next year.

Enjoy your weekend!

Daisy Whitney and I are pleased to present the 44th edition of the VideoNuze Report podcast, for December 18, 2009. This will be the last podcast for 2009, and we'd both like to say a huge thanks to everyone who's been listening in this year.

This week I start things off by providing further detail on my experience so far with Comcast's TV Everywhere initiative, Fancast Xfinity TV (or "FXTV" as I call it for short), which was released in beta to 14 million subscribers this week at no additional charge. On the whole I think it's a respectable effort, and in the big picture, is exactly what the company should be doing with online distribution. The main challenge for improving it is getting lots more content from ad-supported and premium cable networks, so that users are more likely to find what they're looking for. For all kinds of reasons, this won't be easy, but if any company can make it happen, it's surely Comcast.

Then Daisy reviews her '09 predictions and shares her "New Media Minute Awards for Excellence." She recognizes Kaltura, 5Min, boxee, Quantcast, and  number 1 pick, MyDamnChannel. All have excelled this year, attracting new venture financing, signing new deals and growing their business. Daisy is particularly proud of MyDamnChannel because it also achieved profitability this year. Listen in to find out more.

Click here to listen to the podcast (14 minutes, 18 seconds)

Click here for previous podcasts

The VideoNuze Report is available in iTunes...subscribe today!

Simon Fuller's 19 Entertainment announced a new reality series yesterday, "If I Can Dream" which will rely on streaming, mobile and social media to dramatically enhance audience engagement. "If I Can Dream" will follow five young actors as they pursue Hollywood fame and fortune. The series will be distributed on its own site and through Hulu, MySpace, Clear Channel and others.

While the show will have a traditional 30 minute television-show format, it's clear that Fuller plans to use technology to differentiate the show from the myriad other reality offerings. All of the actors' moves will be streamed live using new sensor technology and audiences will interact with the actors via text, blogs, Twitter, MySpace and other in real-time. For sponsors Pepsi and Ford, we'll no doubt see new brand engagement opportunities. Some of this has already been done with other shows, but Fuller appears to be looking to take it to a whole new level.

Hulu's role is also intriguing. I haven't thought of Hulu as having a place in broadband-only original productions, but as I consider this move, it makes sense. Though deal terms were not disclosed, Hulu is likely putting up no money, and is instead bringing its substantial traffic and promotional capabilities to the partnership. It costs Hulu nothing to give "If I Can Dream" visibility on the site, so it's in a strong position to help establish the show. With the company's reach into brands and agencies it can sell ads without bumping into broadcast networks' sales reps.

Amid much anticipation, Comcast launched its "Fancast Xfinity TV" (my shorthand will be "FXTV") service yesterday. FXTV is Comcast's TV Everywhere offering and it will initially be available only to the company's approximately 14 million "dual play" (digital cable + broadband Internet access) subscribers. Comcast is keeping a "beta" label on FXTV for now, to give it some time to work out the kinks. As a Comcast triple-play customer, I have access to FXTV and I played around with it yesterday and last night. While there's plenty of room for improvement, overall FXTV is off to a respectable start.

When dual play customers now visit Fancast they are immediately notified through a prominent pop-up that there's "Great News for Comcast Customers" about online access to over a 1,000 new shows and movies. "Get started" prompts the user to enter their Comcast.net email address and password, then a 17.5MB download begins which includes the Move Networks player and an Adobe Air application. After naming your computer (you're allowed up to 3 devices to access FXTV), the site reloads with the new FXTV Beta branding. All of that worked fine for me.

A prominent window at the top of the page promotes 4 current TV shows, but FXTV misses a big opportunity to immediately demonstrate its value by oddly showcasing just 1 program (TNT's "Men of a Certain Age,") that's not sourced from Hulu. Savvy users will know the rest are already freely available there. Why not promote 4 programs that are only available to FXTV users? And why not include messaging like "Exclusively for FXTV Users!" to remind users of the payoff for having just gone through a download process?

On the positive side, below this window, FXTV promotes programming from premium channels HBO, Starz and Cinemax. As a non-subscriber to Cinemax, when I clicked on "Juno," which had a little key icon, FXTV's authentication process kicked in, prompting a message to subscribe to Cinemax to watch. However, when I clicked "Learn more" my popup blocker interceded which meant I needed to disable it and then reload the page. The Cinemax promotional page that loads is generic from the Comcast.com web site, featuring a graphic of "Gran Torino" and promotions for 3 other movies. Comcast has a golden upsell opportunity when FXTV users click on premium content. It would no doubt improve its conversion ratio if the landing page were customized to load a graphic of the original movie or show selected at FXTV, well merchandised with trailers, clips and other information. A special offer/reward for FXTV users would also help.

Back on the FXTV site, below the premium channel promotions is an area for Full Episodes, categorized by "Celeb News," "The Hot List," "Dramas," etc. Once again, many of the thumbnails link to content that is freely available online and to all other Fancast users. Once again, I'm surprised that Comcast isn't doing more to promote programs that are only available to FXTV users, making it more explicit what's special about FXTV.

I clicked and watched parts of a number of shows and in general my experience was positive. I've read other reviews describing buffering delays, but I didn't experience any issues, or at least anything different than I typically do when starting videos at other sites. One thing Comcast disclosed on the press call yesterday was that FXTV would be available to dual play subscribers outside their homes. Recall that in the 5,000 person trial, users could only access the service from within their homes, so this is a major step forward. I haven't yet tested FXTV remotely, but will do so while in Florida next week.

The biggest challenge FXTV faces is content availability, particularly from the ad-supported cable networks. For example of last week's top 10 rated cable shows, only TNT's "The Closer" and "Men of a Certain Age" are available on FXTV. Among the top 10, there are no sports (football or WWE) or kids shows like "Sponge Bob" (Nick) or "Phineas and Ferb" (Disney) available. Even for #10 show "Keeping up With the Kardashians" the most recent episodes are from Season 2, back in May 2008 - and this is a show that's on E! Entertainment, a channel that Comcast itself owns! There are no episodes offered of my favorite cable show, AMC's "Mad Men."

The content selection on the premium channels HBO, Starz and Cinemax (note Showtime is not yet available on FXTV) is better, but not eye-popping. For example, the only episodes of HBO's "Entourage" that are available are from Season 2 in 2005, despite the fact that Comcast's CEO Brian Roberts specifically demonstrated and highlighted the idea that all episodes of Entourage would be available when he showed the service at the Web 2.0 conference less than 2 months ago. For some reason HBO must have pulled the rights to Entourage in this time.

A lot of the questions on the press call Comcast conducted yesterday focused on content availability and it's clear that obtaining the rights to distribute the full slate of cable programs online is devilishly complex. To be sure, Comcast has made progress, saying it has 27 networks are supplying programming, totaling 12K titles. There's no distributor in a better position to make online distribution happen than Comcast, yet as I wrote last week about Nielsen not yet being able to collect and then synthesize online viewership, Comcast (and other TV Everywhere providers) are subject to forces beyond their control.

Yet another complicating factor is how advertising in FXTV will work. Comcast said that for now, while "nobody really knows what works best," each network will be permitted to experiment with ad loads. It's not clear how long this will go on, nor what role Comcast will play to guide networks to a certain load. In the meantime though, the downside is that the user experience is inconsistent from one network to another. For an offering that's free to subscribers that's not a big drawback, but the lack of consistency does chip away at least a little bit from the overall experience.

Taken together, Comcast deserves credit for getting FXTV out the door just 6 months since announcing it this summer, which is light speed in cable TV terms. There are lots of ways it can and will be improved upon. Gaining credibility with content providers, so that FXTV can beef up its library is priority #1. As I've been saying for a while now, conceptually FXTV is right on all fronts - it preserves the paid consumer model for content providers, offers users enhanced value and helps Comcast and other providers defend against cord-cutting. Hopefully Comcast and other providers will sufficiently invest in these services to let them reach their full potential.

What do you think? Post a comment now.

Mobile video advertising is showing strength, benefiting from consumer adoption of the "mobile Internet," strong growth in video-capable smartphones and improving availability of high-quality content for mobile devices.

I gained further insight on the mobile video ad opportunity in a conversation yesterday with Ujjal Kohli, the CEO of Rhythm New Media, a firm focused on mobilizing and monetizing TV programming that has raised $27 million to date from a group of blue-chip of investors. Later this week Rhythm will formally unveil "RAMP," the Rhythm Advertising Media Platform, a mobile video ad network targeted to brands already advertising on TV who now also want to have a mobile presence.

Ujjal makes a strong case that mobile video is an ideal environment for brand building, and that it addresses many of the challenges that TV advertising itself is facing (clutter, distraction, fragmentation, inadequate frequency/targeting/measurability). Ujjal believes that the nature of mobile video consumption, with its relatively short duration, focused user sessions gives brands a renewed opportunity to engage their target audiences with hard-to-skip messages, not only in the prime-time window, but throughout the day as well.

Rhythm has been helping stoke the market for high-quality mobile video content by building video apps for clients like Discovery, E! Entertainment, TMZ, TV.com, Family Guy and others. App building has been a means to an end for the Rhythm, which is primarily focused developing its mobile video ad network. In Q4 the company has sold and run 20+ campaigns, for brands like MasterCard, Nikon, Toyota, Marriott, Anheuser-Busch and others. These are almost always 15 second spots repurposed from TV campaigns which is no surprise, as the mobile market is not yet big enough to warrant custom creative.

Ujjal explained that a key Rhythm differentiator is that its ads allow interactivity, or the ability for the user to click on an ad's call to action, as is common online. Rhythm has devised a way to incorporate interactivity in ads shown against videos viewed on iPhones, where the use of QuickTime doesn't enable linking. Ujjal said that click-through rates for its "interactive pre-roll" unit fall in the 2%-6% range, while a "full page" ad unit used for mobile photo viewing, (e.g. slide shows on TMZ.com) generate click-throughs up to 11%. Ujjal would not specify what volume of ads Rhythm is serving, except to say it's in the millions/month and that the CPMs are higher than in online video or TV itself.

I've been very bullish on mobile video for some time now, as I believe it is following a similar growth pattern as online video. The macro-trends supporting mobile video's growth are impressive: Nielsen believes that in Q4 '09, 40% of all phones sold will be smartphones and that by 2011 they'll be majority. By then Nielsen forecasts 90 million a month will be watching mobile video. According to its Q3 '09 A2/M2 report, almost 16 million are now watching mobile video/month, up 53% since Q3 '08. They are watching an average of 3 hours, 15 minutes/month. While this is inexplicably down a bit from a year ago, it's worth noting that the heaviest users, to nobody's surprise are age 12-17 (7 hours, 13 minutes) and 18-24 (4 hours, 20 minutes). As these segments age they'll no doubt carry along their mobile video expectations.

Another dynamic sure to have a positive impact on mobile video consumption is the intensifying competitive battle between carriers and between smartphone manufacturers themselves. The recent AT&T-Verizon ad war about their 3G availability is a glimpse of how these companies will use network capacity (key to a positive video experience) as a competitive lever. On the handset side, there is hyper activity: Motorola's Droid is off to a respectable start, a bevy of Google's Android-based smartphones are due in 2010, and, complicating things further, Google plans to release its own "unlocked" (i.e. carrier neutral) Nexus One smartphone next year. While the iPhone opened the smartphone floodgates, many others are now rushing to get a piece of the action.

The biggest uncertainty impacting mobile video's growth is the wireless networks' ability to keep up . All the snazzy smartphones in the world won't matter if users can't get 3G or better access to watch quality video. But, if broadband is any guide, wireless carriers will build out capacity to meet demand, driving up data plan subscriptions and their own ARPU. Broadband also illustrates that as the necessary building blocks fall into place, content providers will be motivated to take part, providing consumers with ever more choices. While it's still early days, taken together it looks as if big things lie ahead for mobile video and for those like Rhythm who can help monetize it.

What do you think? Post a comment now.

Performance-based video ad network SpotXchange will announce this week a new partnership with audience profiling firm Quantcast that will allow SpotXchange to offer demographic targeting across its entire network as well as Gross Ratings Points (GRP) based campaigns, the standard for TV media buying. As Bryon Evje, SpotXchange's EVP told me last week, being able to translate campaigns into a "cost-per-point" model for its clients means SpotXchange will be more appealing to traditional TV media buyers evaluating online video ad opportunities. SpotXchange's goal is of course to lure over ad dollars traditionally spent on TV.

If a SpotXchange advertiser is also a Quantcast client, then the advertiser will be able to proactively define a specific audience it wants to target and then buy just those ad placements from SpotXchange that fulfill its objective. SpotXchange can use Quantcast's data on particular segments to determine how many GRPs are available, and then by combining its own pricing, can calculate what it would cost a client to reach that audience on a per point basis.

SpotxChange can separately offer demographically-targeted ads by doing a real-time match against Quantcast's data, before an ad is served. If there isn't a targeted user available, then no ad would be served, reducing spending waste and enhancing the overall campaign's ROI.

Quantcast's demographic information is derived by tracking the behaviors of 220 million Internet users across thousands of web sites. I talked briefly with Quantcast's head of business development Winston Crawford who explained that the company's secret sauce is an "inference model" that takes the behavioral data and mathematically translates it into affinity levels.

From this Quantcast is able to build a "lookalike" model which allows advertisers to target those users who have similar affinities (and as a result a higher probably of converting) elsewhere on the web. In the case of SpotXchange, the lookalikes targeted would be users of sites in its publisher network. Quantcast already works with other video ad networks such as Tremor and BBE, along with many display ad networks.

Melding online video ad campaigns with traditional GRP measurement has gained momentum this year, as other video ad networks like Tremor, BBE and YuMe have announced their own initiatives. Combining a GRP approach with demographic targeting offered by firms like Quantcast is further evidence that the online video ad medium is continuing to mature. Despite the news today that CBS Interactive is phasing out its use of third-party ad networks, as video ad networks move to offering campaigns that can be evaluated along traditional TV criteria, this should in turn draw traditional TV ad dollars to online video. That would mean video ad networks' value would increase.

What do you think? Post a comment now.