February 12th, 2008

YuMe Bolsters Online Video Ad Platform

By Richard Martin
Information Week

YuMe's Adaptive Campaign Engine is an integrated software suite for serving ads matched to viewers' tastes, online profiles, and viewing habits.

Pushing forward in its drive to build a lucrative online-video advertising market, video ad server YuMe Networks Tuesday added a new wrinkle to its ad-management system that will help content publishers maximize revenue from their video streams, the company said.

Called “Adaptive Campaign Engine,” the new platform is basically an integrated software suite for serving ads matched to viewers’ tastes, online profiles, viewing habits, the videos currently being streamed, and so on. Accessible to publishers via a password-protected Web portal, the system accepts ads from YuMe’s sales force, third-party ad networks, and syndication feeds from large online ad providers such asGoogle (NSDQ: GOOG) and Yahoo (NSDQ: YHOO).

Based in Redwood, Calif., and backed by high-powered Silicon Valley venture funds Accel Partners and Khosla Ventures, YuMe is among a clutch of startups that are finding ways for advertisers and content publishers to make money off of online video, whether on file-sharing networks like BitTorrent or from professional producers. YuMe concentrates on the “middle tier” of video producers. “The bulk of our content comes not from ABC, but not YouTube either,” said CEO Jayant Kadambi.

Among the video producers using the YuMe advertising network are MondoMiniShows, HappyTreeFriends, JoeCartoon, Flowgo, and Vuze. Last April multimedia file-sharing site BitTorrent inked a deal with YuMe to display ads along with its video content.

Online ad companies like YuMe, Hiro Media and Brand Asset Digital are entering on the ground floor of what many analysts believe will be an explosion of online advertising revenue in the next few years. Online researcher Emarketer says that online video ad spending will double from just under $800 million in 2007 to $1.6 billion this year, and hit $4.3 billion in 2011. The total online advertising market will hit $50 billion by 2011, according to the Yankee Group.

TV advertising, by comparison, brought in more than $60 billion in 2007.

Key to enabling this cashflow is targeting online video viewers with ads that are relevant, timely, and “non-irritating,” Kadambi said. One feature of the new YuMe platform is that it can serve up multiple ads, collect and analyze data about which actually get watched as opposed to fast-forwarded through, and serve the most successful one for subsequent viewers.

It’s not enough to just target Web sites with theoretically relevant ads, said Kadambi: “Unlike banner networks, which are targeting a Web site, we let you target the content itself,” he said. “For example, if you’re watching CNN.com, there’s a big difference between a sports story vs. a political story.”

YuMe’s management platform optimizes ads for any format, including PCs, mobile devices, and high-definition screens. Since launching the system in mid-2007, the company says it has now reached 46 million unique visitors per month, serving up 150 million video streams with “tens of millions of ads.”

Kadambi aims to make YuMe “the biggest independent video network out there by size.” The question for the multiplying online-ad startups is whether the business will come to be dominated by a few content producers, like the big networks and movie studios, and by a handful of digital marketing firms like DoubleClick.

“We hear [ad] agencies say ‘We can’t get enough reach in order to spend $100 million online, there’s no network that big,’” said Kadambi. “We hope to solve that problem very soon.”

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