Adap.tv is Bullish on Online Video Advertising Growth

Video has become an integral part of the web browsing experience. But despite its widespread adoption by consumers and publishers alike, the monetization of online video has been somewhat lackluster. A key reason behind the shortfall between potential and reality is that there is a diverse array of technology platforms for serving video ads.

Apap.tv, an Israeli startup headquartered in San Mateo, and Digiday, partnered on a report that summarizes the Internet’s Digital Video advertising market. Over 600 agencies, publishers, advertisers and online video tech providers provided their input on the poll back in September 2011. Their big question was: “what does the future hold for online video advertising in 2012?”

Below are the main takeaways from the poll:

  • Rates for interactive video ads are up an average of 19% over last year.
  • Advertisers and agencies don’t consider interactive media as a replacement for either TV or cable.
  • Interactivity will drive innovation and spending in online video in the coming year, but it may come not just from interactive pre-roll, but via social sharing, and the tracking of such interaction by consumers.
  • Premium video content providers should maximize their reach and engagement to grow revenues via partnerships.
  •  Mobile video is a lucrative place to be for online advertisers, but it’s not perceived as a very different channel to online video. Adopt Android and IOS to reap the benefits of mobile engagement
  • If you miss ‘social sharing’ of videos, you will miss the next big wave
  • ich media overlays, pre-rolls, and content integration are the favorite ad formats.

The report is full of interesting stats. For example:

  • 35% of respondents said that 11-30% of their video inventory is not being monetized. Only a quarter of respondents operate in full capacity.
adaptv state of the video industry
  • broadcast-quality video continues to command
    premium prices
adap tv report state of video industry
  • Video ad spending on the iPad is up 18%, the highest among all devices
  • Dogs on skateboards aren’t worth much: the average CPM for User Generated Content: $0 – $5

For more stats, download a copy of the PDF report: “State of the Video Industry, November 2011

Adap.tv pioneered the first video advertising Marketplace (ATM). The objective of ATM is to bring together a full ecosystem of agencies, publishers and ad networks to facilitate a transparent, open exchange of ad inventory using efficient market mechanisms. The value in this solution lies in its shared technology platform (which is IAB certified), as well as transaction processing and controls, that will effectively reduce the level of commercial friction that has existed up until now.

As with any marketplace, the challenge for Adap.tv lies in satisfying both buyers and sellers of ad inventory. Sellers benefit by being able to maximize yield for impressions through gaining access to qualified buyers, and have control over listing options. These listing options allow them to address relevant markets in a way that is consistent with their ad sales policies.

On the other side of the equation, buyers gain access a large inventory of impressions, and obtain transparent pricing information that is determined in a transparent manner by market mechanisms. Further, Adap.tv’s real-time bidding functionality allows advertisers to use their own insights to control placements and optimize campaign performance.

The company is positioning itself to become the real-time ad exchange for the online advertising segment. As the online video advertising segment continues its rapid growth, there is undoubtedly a large amount of value to be derived from the buying/selling of inventory in an open, transparent way, using an IAB certified technology platform. The company is, however, likely to face significant competition from the video ad networks, which have an opportunity to build out their own exchange functionality. It could make sense for the larger ad networks to not yield power to a middleman at this early stage in the market segment’s evolution.

For all of the hype surrounding the real-time web in consumer-facing domains, some of the major real-time breakthroughs are taking place behind the scenes. Adap.tv’s Marketplace is a case-in-point, and demonstrates that online video advertising is on track to become a highly efficient market – but the question of how much room there is for multiple online advertising marketplaces remains open.

The company was co-founded by CEO Amir Ashkenazi – a Tel Aviv University graduate and founder/former CTO of Shopping.com, Dan Klein (who serves as ‘chief scientist’) and VP Product Ted Grenager. Since inception in 2006 Adap TV has raised at total of $48.5 million from Spark Capital, Redpoint VenturesGemini Israel Funds, Bessemer and Spark Capital. Their Series C this March was $20 million.

gmugliston

Geoffrey Mugliston (mer-gliss-ton) is a London-based Australia-born entrepreneur, strategist and blogger. He began writing for VC Cafe in 2009 with the objective of showcasing promising Israeli startups to the global startup and investment community. He is co-founder of a consumer internet company with its development team based in Haifa (currently in stealth-mode). He also serves as adviser to a pan-European startup which develops software for print service providers. Prior to his current projects, Geoffrey worked in management consulting with a focus on the infrastructure sectors. When not working (though sometimes while working) he enjoys coffee, running and engaging in intense debate. He holds an undergraduate degree in finance from the University of Sydney.

gmugliston

Geoffrey Mugliston (mer-gliss-ton) is a London-based Australia-born entrepreneur, strategist and blogger. He began writing for VC Cafe in 2009 with the objective of showcasing promising Israeli startups to the global startup and investment community. He is co-founder of a consumer internet company with its development team based in Haifa (currently in stealth-mode). He also serves as adviser to a pan-European startup which develops software for print service providers. Prior to his current projects, Geoffrey worked in management consulting with a focus on the infrastructure sectors. When not working (though sometimes while working) he enjoys coffee, running and engaging in intense debate. He holds an undergraduate degree in finance from the University of Sydney.