Paid Content reports that video ad network Bright Roll has raised $5M in Series B. I interviewed the firm’s CEO Tod Sacerdoti some time ago, to read the post, click here.
This comes on the heels of YuMe’s $9M round this week, which in turn came on the heels of the massive Scanscout investment by Time Warner Investments… which itself was a knee-jerk reaction to Video Egg’s Series D round (nope, not a typo, that is D as in dude?). See my interview with Video Egg’s CEO Matt Sanchez here.
Last year (2006) web video sales were $439M, 2007 sales will be $750M. That is within the overall $17B online ad market. Of course, if investors are getting giddy, it’s not for the now and here but the tomorrow and maybe. Online video estimates have been mushrooming of late, see the growth in forecasts here:
An estimate of the online video ad market for 2009 - set in 2004: $657 million | Source.
An estimate of the online video ad market for 2009 - set in 2005: $1.5 billion | Source.
An estimate of the online video ad market for 2010 - set in 2006: $2.3 billion | Source.
An estimate of the online video ad market for 2010 - set in late 2006: $3 billion | Source.
An estimate of the online video ad market for 2011 - set in 2007: $10 billion | Source.
Some stats on Brightroll, then some thoughts on the space:
- in August 2007 Brightroll issued a press release saying it had served its 500 Millionth video ad, so presume the actual 500 Millionth stream was done sometime in July, 2007.
- its history page claims to have done 800M streams since the company launched, since we’re in October, I presume that was as of September 2007.
The company was founded in June 2006, according to founder’s Tod Sacerdoti’s Linkedin profile.
If you work out the math, that means it did 500M streams pretty much in one year, which is very robust (41M streams per month, assuming straight math OR 1.36M streams per day, which admittedly does not sound like a lot, but the “straight math” is not a good metric, frankly).
But since July 2007 and September 2007, streams grew from 500M to 800M, or 60%, if you believe the PR spin. Provided it’s true, that is a very strong growth trajectory and implies the company took advantage of the growth in streams to raise some dough. Good for Tod and his team.
Competitive Landscape
By way of comparison however, Video Egg claims 750M streams per month, but Video Egg’s number is that of content streams, whereas Brightroll only serves ads… Video Egg, of course, has done Series A, B, C and D and has well over $30M in funding… (by the way, First Round Capital, the Midas Touch weaving angel fund that backed Video Egg is raising $75M - $100M so hit them up if you’re looking for funds).
From File Networks to Ad Networks
Last year you saw VCs investing in Series A rounds for video file sharing sites. Now that is rare, with VCs investing in Series B, C and D rounds. Think Daily Motion, Veoh, Metacafe. The same is happening with the video networks.
When the Music Stops, Will Everyone Succeed?
No. I’m not sure of all of the file networks will survive, but the few ones that thrive will be just fine… the same will apply to the ad networks in video.
History repeats itself, amongst display banner ad networks, indeed Doubleclick, Fastclick, Valueclick, Blue Lithium, 24/7 Real Media and Right Media all hit paydirt, but it’s worth noting that there are hundreds of ad networks, many fizzled, and many were bootstrapped. Tribal Fusion, for example, was bootstrapped and remains private.
With video ad networks (and file sharing networks), the VCs are out in droves, which means that the stakes are higher. While some of these players will invariably be successful, I expect to see considerable bloodletting before the wine flows…
Risk Factors
What makes the ad network particularly challenging, frankly, is that a lot of the money being raised and spent will be spent on models, technologies and formats that might become redundant. That’s one risk that I’m not sure VCs are properly assessing because Video Egg for example seems to have changed models, strategy, tactics and platform a dozen times… the flip side to this is that some of these firms are in fact quite different and complimentary, now… but as the model develops, friends will become foe and new competitors will creep out of the woodwork.
Second, and this is key, is the fact that search technology is very much early stage when it comes to video, but as that develops, then ad networks will probably have to co-exist with search engines that will become gatekeepers between users and video content. Moreover, even search firms like Blinkx suddenly become chameleons and become file sharing / hosting networks, too: Blinkx the search engine for example is a search source our video meta search MetaMojo.com queries yet Blinkx the video file host is one of the many distribution outlets for our web video unit WatchMojo.com.
Third, there’s the file networks. The idea is that file networks will coexist with these ad networks, but the truth is that with VCs backing these ventures, few will want to share the pie. Many will want to own the platform and that means that the file networks will end up fighting aggressively with the ad networks, in fact, some are one and the same: Video Egg is both a file sharing platform and an ad network…
Fourth, TV companies currently are defenders of a $75B TV ad market. Naturally, the increasing valuations in video startups imply that a good chunk of that market flows online, and that will happen. But to think that TV companies will act like sheep and let Web’s second wave of startups focused on video do what Web’s first players did to print companies, we’re all kidding. Let’s face it, print companies founders are long gone and in their place were managers who got lax. Conversely, TV companies are still largely run by the people who built those companies (Sumner Redstone and Rupert Murdoch being two great examples). As such, TV companies won’t go down without a fight. Then again, that is also what is driving some of the decisions, global agency WPP invested in Video Egg, Time Warner backed Scanscount, and so forth.
Underneath the elbow-rubbing is a fierce showdown to own the video advertising market, the biggest market of them all.
There are many other risk factors, frankly, such as whether user generated content will end up helping or hurting the shift of ad dollars from TV to the Web, net neutrality, piracy and what not… but, well, I do have a call to take in 10 minutes…
The stakes are just rising.
See our comprehensive posts on the online video market here:
- Web video will become larger than search ads?
- Video is a $150B market cap opportunity by 2011?
- Video bubble moving from file sharing networks to ad networks?
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