Tremor’s Q4 Shows Higher Performance-Based Pricing Demands And Mobile Ad Growth

Bill Day Tremor 2013Tremor Video’s fourth-quarter financials, reported Thursday, included a continuous rise in mobile ad revenue and a reduction of its demo pricing-related losses.

The company’s total revenue for 2013 rose 25.3% to $131.8 million year-over-year. Its in-stream revenue was $128.3 million, a 28.7% increase from the same period in 2012. It reported a net loss of $13.5 million for 2013 compared to the prior year’s loss of $16.6 million.

Demo pricing — a traditional buying method in which TV media buyers only pay for ads that were delivered to a particular audience segment that includes low eCPMs — has negatively affected Tremor’s profit margins, according to the company.

To stem its losses, Tremor has been improving its demo pricing offerings while encouraging advertisers to move towards performance-based pricing. The company continued to see positive results from its efforts, claimed CEO Bill Day.

“Our ability to optimize demo campaigns has continued to improve such that we are now able to benefit from increased demand from TV buyers for demo buys,” Day said.

To push advertisers towards performance-based pricing, Tremor introduced several pricing formats centered on whether a consumer’s favorability and intent for a brand was affected. Those formats include the CPQ (cost per conquest, where advertisers’ intent for a brand has shifted) CPS unit (cost per brand shift) and its Media Ratings Council-accredited CPV&C (Cost-Per-100% Viewable & 100% Complete).

As it encourages advertisers to move past demo pricing, Tremor reported signs that advertisers are beginning to adopt performance-based pricing. Notably, 29.8% of the company’s total revenue was attributed to performance-based pricing for 2013, compared to 22.7% in 2012.

“We believe we can convert demo buyers to performance-based buyers over time,” said CFO Todd Sloan.  In regards to its programmatic tools, Sloan said partners continue to test additional features on its VideoHub Connect platform, which it will launch as a “full-service programmatic offering” before the end of the second quarter.

Additionally, mobile is beginning to play a greater role in the company’s offerings. Late last year, the company hired engineers from the shuttered mobile ad exchange Mobclix to develop its programmatic offerings. Approximately 15% of the company’s revenue in Q4 was mobile-based, compared to 8% in the same quarter for 2012.

Day said the company is “leaning forward in mobile” and, eventually, “everything we do on our platforms will be extended to support mobile as well as video.”

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