Following a March launch of its first programmatic platform Video Reach, video ad tech company YuMe showed 40% growth in revenue year-over-year, totaling $37.3 million for the first quarter.
While some might say YuMe is late to the programmatic party, cofounder and CEO Jayant Kadambi said the company is methodically building out a diverse set of tools to fit a variety of buyer needs.
YuMe is ramping up platform distribution points. On Wednesday, it inked a deal with JW Player, an online video player for publishers, to integrate its Audience-Aware SDK (which provides hooks to premium Audience Segments through YuMe’s viewer database, the Connected Audience Network) to the platform.
Kadambi spoke with AdExchanger.
AdExchanger: Where does YuMe fit in the digital video ad ecosystem these days?
JAYANT KADAMBI: We go to TV brand advertisers and tell them we can help get their audiences as they’re migrating online. The video infrastructure is very different than the display infrastructure. It’s not just about websites. It’s about mobile, tablets, connected televisions and we believe that it’s a software problem you can solve with data sciences that can really add value to TV brand advertisers.
A buyer [might say, for example] “I want to buy ‘Glee’ and I’m reaching 10 million people and I want to reach 3 million more.” So we say, “we’ll find you the ‘Glee’ audience online” if you want more frequency, or we’ll find people who haven’t seen “Glee” if you want additional reach. We use data and our survey capabilities to build an audience segment that are or aren’t “Glee” watchers. Our goal here is to make it very simple for TV people.
What’s the future of TV buys amplified online?
I’ll give you an analogy. If you think about the TV advertising business today, it’s about advertising on NBC, CBS, ABC, FOX and cable. That’s how they get their audience – through reach, the number of people who saw the ad and frequency, the number of times they see the ad. If we do our jobs well, you’ll see in five years, in addition to how brand advertisers advertise on TV, they’ll advertise on O&O properties: Facebook, Google, Twitter. And they’ll [need] an equivalent to cable – the run of network, aggregation is far more necessary in the future because of the thousands and thousands of content owners. And we want to be the equivalent of cable – so people will advertise on Google, Yahoo, Facebook and then YuMe as sort of the cable equivalent.
How do your advertisers measure performance on campaigns?
Currently, people want reach and frequency. It’s just assumed, when you watch television, that you’re paying attention. When you have multiple devices and you’re watching videos online, on mobile, on tablets, it’s hard to assume people are paying attention because there are so many distractions. It’s not enough in the digital world when you’re advertising for TV brand videos to just find males 18-49 or females 18-49, or demographics. It’s important not only to find the person, but find them when they’re paying attention and figuring out when they’re aware of the ad or when they’re receptive to the ad or when they want to see the ad we think is a math problem, it’s a software problem. So we’re concentrated on using data sciences to help tell a better TV brand story.
Have you seen traction for your new programmatic tool, Video Reach? How does it fit into the rest of your stack?
If you look at digital, money flows through video, search and other things, and on the TV side it flows through spot TV and national television buys. If you’re selling a product into a large market, the buyers for that product come from different stores. Say I’m selling Prada shoes. I’m assuming they have a Fifth Avenue branch, the flagship as they call it. You can go to Prada and you’ll probably get a great customer experience and you can probably special order things.
If you want a little more breadth, you can also go to Macy’s, and look for Prada shoes or other shoe types. You get a little more breadth, but not necessarily all the styles you want. That’s the way department stores work. Then you can go to outlet stores – where you get Prada’s last year’s models and the primary reason you went there was cost. And so that same product is being sold through different channels and there are different buyers for different channels. The way we look at this is, we opened a new distribution channel for our product.
So, are you Macy’s, the Prada flagship store or the outlet?
We’re Macy’s. You can come look around the store, it’s a fairly high-end store, good service, good product, and you get choice. If you want to buy at the outlet store, and you’re primarily focused on cost, we have [Video Reach], a product that automates things, tends to have less human interaction. … We have our current business, which is direct sold, so that’s Macy’s, and we opened up the outlet store.
Direct-sold is the traditional way of buying TV inventory, and why there’s still some trepidation pivoting to programmatic.
When Borders got crushed by Amazon, and this is the problem with the way people think about it when they say “automated is going to crush brick and mortar,” the lesson we took from it is Borders did not add any value that Amazon didn’t have. They were selling the same product. So when you bought a book at Borders, you weren’t getting anything different than when you bought it at Amazon. [Amazon provided] a similar product, but they’re adding value that you can’t get at [Borders].
YuMe offers advertisers access to “TV segments.” Time Warner Cable offers “TV Tribes.” Are you competing with cable?
We think it’ll evolve to just like how it is with today’s TV world. There will be a few big guys where people will go and advertise and then they need a more efficient option and will go to cable because they’ll get scale and efficiency and we’re competing on the scale perspective, just like cable is competing. It’s a little more cost efficient, it gives far better scale and it’s still a little more cost efficient and gives far better scale, and people are aware and receptive.
All the premium broadcast content owners have an issue because their share of voice online is declining as a percentage of total videos being viewed. Unlike television where six, maybe 10 guys pretty much own all the viewership, online if you add up NBC, ABC, CBS, Viacom, Time Warner, the percentage of mindshare they have from video viewership is declining over time. If they had 20% share five years ago, they have 10% share now for the number of videos viewed. And so I think we’re in a different business to answer your question.
What business are you in?
We’re in the business of: “We will aggregate really large-scale, for you, Mr. TV advertiser.” Whereas Time Warner is saying, “I’ll … get the same Time Warner audience and extend it online.” But they have very little scale compared to television. Everyone is trying to convince you their content is the best, and it often is the best, but there’s not enough of it.
Let’s talk about YuMe’s future. Your CFO, Tim Laehy, departed in May and joined Livefyre. Have you filled the role and what’s your headcount?
The role is temporarily being held by Tony Carvalho. Tim actually hired him and most of the staff. He was with us three years and built a great staff. We have a search going for a strong, public company CFO. Tim has a history of coming to companies, building their finance teams, taking them public and then coming back and doing it again. As for our headcount, we’re growing heavily. We hired 100-150 people in the last year. We’re 500 people, give or take. We have 250 in the US, 200 in India and maybe 50 in Europe. Most of the staff in India are engineering people. We’re very tech heavy.
What’s next on the business agenda?
You will see us open up multiple distribution channels. The best way to increase sales of your product is put it on every street corner in a controlled fashion. We think international expansion is a big opportunity, and we think the business process to get advertising money into digital from digital agencies can be complemented with stores that are catering to TV agencies. The television advertising business is a big business and I think you’ll see us open distribution points there as well in addition to Video Reach to the digital agency trading desks. There’s people like Mediaocean and Strata that cater to the TV side of the business.
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