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Summary:

We’ve been tracking ScanScout, a contextual video ad startup, since last year, and were interested to hear the company starting to open up about what it’s doing. Over the past few days we’ve been chatting with ScanScout CEO Waikit Lau to hear more about the interactive […]

We’ve been tracking ScanScout, a contextual video ad startup, since last year, and were interested to hear the company starting to open up about what it’s doing. Over the past few days we’ve been chatting with ScanScout CEO Waikit Lau to hear more about the interactive ads the firm plans to roll out this month. Here’s a screenshot and Lau’s explanation:


What you are seeing is a video ad that fired up on the screen after someone just clicked on the little “base” ad at the bottom. In this case, the video ad is a Public Service Announcement for Big Brother/Big Sister. You can see the original video content paused at the background.

Two-year-old ScanScout uses a combination of video analysis, audio analysis, and metadata to determine the context of a video and pair it with an ad (being especially careful about juxtaposing brands with sensitive material).

The company is making a pretty bold bet on its targeting skills, electing not to provide the standard CPM pre- and post-roll ads. Instead, 1) its system will be performance-based, meaning ScanScout gets paid only when people click though, and 2) it will not replace existing pre-roll or post-roll ads, but instead run a nondescript line of text below a video for viewers to click on.

Are people really going to click on ads around the periphery of videos? ScanScout currently places banner ads on sites such as Blip.tv, and Lau claimed that contextual relevance has driven click-throughs “extremely meaningfully much higher” than industry averages of less than one percent. The hope is this phenomenon will continue for higher-revenue video ads.

The new ads (as depicted in the screenshot above) will be shown by “dynamically inject[ing] a little script at the bottom of the video,” said Lau. “If you click on that strip, the video you’re watching will pause and then it telescopes up into an ad.”

ScanScout started with the problem of rich media search in 2005, said Lau, when he and former MIT classmate Steve Lee decided to start a company together. “We said let’s put in a grand each and buy a Dell server and see what happens—we weren’t going to quit our day jobs.”

Two months later, Lazy Sunday exploded on YouTube, and the two were blown away by Alexa traffic charts for the site. “So we quit our jobs,” recalled Lau. “In hindsight we weren’t really sure about a lot of the details. Worst case scenario, we find another job.”

In May of 2006 the team raised an over-subscribed angel round of $2.3 million. The company, which has 11 employees, is currently seeking additional funding. Lau’s exit strategy is quite transparent. “Advertising campaigns are most effective when the buy is across multiple media — there’s a lot to be said for a one-stop shop,” he said.

Of course, the competition in the space is only growing; there’s also Tremor Networks, Broadband Enterprises, Immen.se, YuMe Networks, BrightRoll, and most likely Google.

So if you’re so good at figuring out what a video’s about, we asked Lau, why stop with ads? Why not also do search? He laughed. “We actually have a search engine we built a year and a half ago which we never released. We’re not taking it off the table but B2C is very different than B2B. From a focus standpoint, it’s a very different business.”

Indeed, providing monetization services to video sites isn’t a bad place to be in right now. It’s helpful when your target customers all have their backs against the wall scrambling to make a living.

  1. It is exciting to see how new technologies can be applied to serve and monitor truly contextual online video ads.

    Anyhow, I thought I would take this chance to pass along an opportunity to have input into the development of this space. If you qualify as someone who makes decisions about distributing content online, Mercer Management Consulting will pay you $100 to complete an online survey about new options and business models content distribution. Visit http://survey.mercermc.com/digitaldistribution to get more info and begin the survey.

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  2. Just a week back google announced a deal for advertising on TV ( not sure if it is PPA ). So the market is hot with competition. So it is important to stay ahead of the race. To lead the race signup as much publishers as possible. Flog your marketing team.

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  3. [...] как это выглядит, посмотрите на скриншот, опубликованный в блоге [...]

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  4. I found ScanScout’s concepts very interesting and innovative. However, rich media has proved to be good for branding purposes rather than direct response. I do have my doubts that a business model built around electing not to provide the standard CPM pre- and post-roll ads will prove challenging in the future. Based on reaseach done by Broadband Enterprises new Ad Serving Platform “VIndico”, rich media does not always deliver successful click throughs. I also find that the line of text below a video for viewers to click on may not be as successful as anticipated simply because viewers may interpret this as spam.

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  5. [...] and First Round Capital. The company had raised $2.3 million in angel funding a year ago (See our profile from last [...]

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  6. [...] some 13 to 15 sites, including blip.tv, Operator11, and Next New Networks, according to McFarland. Remember the company’s strength is contextual targeting, done mostly on a performance basis so [...]

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  7. [...] had raised $2.3 million in angel funding from Ron Conway and First Round Capital, a $7 million Series A round led by General Catalyst [...]

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