JONATHAN CARSON: Vevo has a very large audience: 6 billion video views every month. The bulk of what we're selling is premium sponsorships. Brands want to link with pop artists or a genre of music.
However, we realized going forward, the numbers are growing rapidly and we have to monetize multiple different ways. We've established video as a TV content-like environment and we have the pricing that comes with it. We had to do programmatic in a careful way not to destroy it. We feel Adap.tv understood those constraints.
It's experimental at this stage [with] lower-tier inventory. Publishers are trying to create a marketplace for inventory that would otherwise go unsold. But in the past few months, that's been changing. We've been having more conversations that are looking to apply the set of pipes to different sets of content.
What needs to happen for programmatic to mature?
I think the first stages of programmatic were around creating a marketing place for inventory that was likely to remain unsold. That's on the publisher side. On the buy side, it was primarily about getting greater price efficiency. A whole set of plumbing was created in order to facilitate that new marketplace. And it's at the point [where it] works very well for the buyers and sellers, to the point where it can be used for other categories beyond price efficiency and unsold inventory.
For Vevo, that evolution includes the move beyond display into premium video content. Programmatic has moved up-market. And we're all figuring out how to do that. Just in the last quarter or two, programmatic ad sales have started to become more meaningful to us.
How significant is the idea of "programmatic direct?" In particular, how quickly is the focus changing from remnant ad inventory to reserved inventory?
It's still early. We're still having the initial conversations with the buyers to figure out how this is going to work. The rules of engagement for anonymous content that's pooled – advertising around an audience, regardless of what the associated content is – that is a very different kind of marketplace from the one we'll participate in.
A huge part of our value is the content, in addition to the large audience. We have no intention of divorcing the content from the audience. So the parameters of the type of programmatic environment we want to see are still being established. We viewed our entry into programmatic as an early one, primarily because we want to stay ahead of that train.
What about connected TV? What are the challenges of cross-screen programmatic ad sales?
Vevo is a platform company, and we are everywhere. For our users and our advertisers, we see the PC, mobile, tablet and connected TV as a completely cohesive system. Certainly, there are technology limitations. As we go on to new systems, platforms don't naturally talk to one another, ad servers need to be integrated. We have to go through that process. But we have every intention of making sure our inventory participates seamlessly within the various systems and platforms.
Are your advertising sales focused more on the PC Web or the mobile and apps ecosystem?
We're still mostly talking about the PC, since the pipes were mainly built with that platform in mind. For us, our 2013 audience volume growth was tremendous and largely driven by mobile. In 2014, the volume growth is again expected to be tremendous – and in this case, we're expecting it to come from connected TV. That channel is becoming very important.
Given the hurdles of connecting various systems, do you see a need for other partners beyond Adap.tv?
One of the benefits of the programmatic space is interoperability. Adap.tv is an important partner for us. But it is an open marketplace and we also have a very important partnership with YouTube.
What's the nature of the YouTube relationship?
YouTube is our biggest distribution partner and we're their biggest content partner. So the companies have a very deep relationship. As they go further into this space, we'll certainly explore what they have to offer us. But for right now, the primary programmatic tool we use is Adap.tv's private marketplace.