Canadian video ad platform SourceKnowledge has closed $1.5 million in mezzanine financing from BDC Capital that it will use for product development and building out its West Coast operations.
The Montreal-based company, which was founded in 2009, is profitable and was largely bootstrapped until now, so it wished to remain modest by taking a mezzanine loan (which is essentially a hybrid of debt and equity), according to its cofounder and president Patrick Hopf.
“We were a little too big and too mature to look at venture capital, but still not mature enough to enter into a big growth round, so we found an arrangement that made sense for us,” Hopf said. “We may look to do further investment down the road.”
SourceKnowledge’s sweet spot has primarily been helping ecommerce brands apply performance-based approaches to their video tactics.
For instance, millennial menswear retailer Frank & Oak wanted to build awareness and, ultimately, drive more sales so it used SourceKnowledge to encourage new member sign-ups via mobile app install ads, as well as targeting pre-roll on YouTube.
Although the company initially positioned itself as a video DSP, Frank & Oak and other brands weren’t buying video in isolation from their display and mobile campaigns.
Video is universally known as a great branding mechanism, but Hopf sees untapped opportunity in applying the channel to more direct-response scenarios – optimizing to specific outcomes, not just hitting target CPMs.
If you’re an ecommerce site selling shoes, video might be a consumer’s first “click” into a brand. Pulling consumers through the sales funnel and converting them into to long-standing customers, however, requires much more nurturing.
“We’re building tools for marketers to buy video and display both on the browser and in-app, but also to really get a sense of what that spend has accomplished,” Hopf said. “If you can help improve average order value or show you’ve spent ‘x’ amount of money but got better results than forecasted, those are the metrics brands care about.”
SourceKnowledge’s Engage platform will be generally released at the end of Q1 or beginning of Q2. The company's main target is ecommerce companies and other verticals such as mobile game and app publishers and software-as-a-service companies, which focus on user acquisition and retention or recurring revenue from licenses.
“We’ve had a lot of interest from a pure reach standpoint against targeting specific audience segments, geos or comScore-rated sites with video,” Hopf said. “But we’re also seeing interest in performance metrics and getting into more acquisition and conversion across the funnel.”