In advance of the second Future TV Advertising Forum in London, Sorosh Tavakoli, the founder and chief executive of Videoplaza, spoke to informitv about its online video advertising platform and general industry trends. He believes the opportunity for his company lies in the move from what he calls old TV to the new TV, on which he says adverts will be delivered and measured very differently.
Just two years ago, Sorosh Tavakoli showed informitv a demonstration of its online video advertising platform on a laptop. It looked promising but the prospect of entering a market dominated by companies like Google appeared daunting.
In March 2010 his start-up company received £3 million in venture capital investment and it now employs 35 people. Richard Titus, the co-founder of Schematic and a former controller of future media at the BBC, has joined as a non-executive director. The company, which is based in Stockholm and London, has also signed RTL as a client, among other broadcasters.
“We’re seeing the market just exploding for us,” says Sorosh. “The new TV is really happening. The reason we exist is the big shift in consumption going from the old TV to the new TV. The old TV is linear broadcast — everyone gets the same adverts. In the new TV world it’s on demand, it’s delivered by IP, it’s interactive, and it can be on any screen. The advertising also needs to be dynamic. The way the new TV will be monetised will be quite different from the old TV.”
“When we started we were very much a niche player. A lot of the potential clients we talked to saw online video as a niche thing within their online offering. They were only publishing video on their web sites in a flash player. Some of them were syndicating content. Now everybody already has or plans to launch iPhone apps, android apps, or an HTML 5 version of their web site. They syndicate content to Xbox and PlayStation, and they’re thinking about YouView. This is no longer just a part of their web site. It’s something on its own.”
Videoplaza sees this as a significant opportunity because it believes established online display advertising solutions, such as DoubleClick, now owned by Google, do not adequately address the requirements of video across all these platforms.
Clients are also suspicious. “Most of our clients don’t like Google. They believe Google is evil because they’re eating their lunch. Many of the publishers we talk to that are not comfortable with Google stealing their revenues and having access to all their data.”
The founder of Videoplaza recognises that Google, which through YouTube is the leading player in online video, has enormous resources with which to compete. “I assume they will at some stage say they need to be in this space and buy their way in.”
He does not concede the prospect of selling out, just yet, so how does Videoplaza differentiate its platform?
“It’s a technology play — pure software as a service. We’re always on the side of the publishers. We are enablers. We enable them to use their inventory in the most efficient way. We don’t compete with them in terms of selling ads. They simply pay us for serving the ads. The more ads they serve, the more they pay us.”
At the moment, he says, online video adverts are generally sold by the online team, but this function is beginning to merge with the main airtime sales business.
Many broadcasters can sell as many as they can deliver and maintain good cost per thousand rates. “You always hear two different things,” he jokes. “If you speak to the agencies, they say they never pay more than ten quid. Then the broadcasters say they never charge less than twenty. So it’s somewhere around £15-20. Then there are always advertising networks doing £7-10.”
With broadcasters and other video publishers experimenting with other monetisation models, Sorosh does not believe that they will rely exclusively on advertising revenue. “They don’t need to,” he says. “They may have a mixed model. I’m not advocating that advertising is the only way. I think we’ll see freemium being the model moving forward. It’s all about finding the right recipe for you and your content.”
Videoplaza started out supporting Flash but now also supports Silverlight and HTML5. “We very much believe in HTML5,” he says. “We see it as becoming an open standard. It’s not even a standard yet. We really hope that’s where things will end up but for the coming couple of years Flash will be very dominant.”
With the ability to deliver video to the television screen, online video advertising is being taken more seriously. “We’re waiting for the killer app for the living room. We know it’s going to come. No-one will know who the winner will be. It could be YouView. It could be Apple TV, Google TV, Boxee, or maybe none of them, maybe another one five years down the road. That’s when we see the big budgets shifting from the old TV to the new TV.”
Sorosh Tavakoli, the founder and chief executive of Videoplaza, was interviewed by William Cooper exclusively for Connected Vision © 2010 informitv.