There are few people who have direct experience of both online video and connected TV advertising, and fewer still with experience of both the buy and the sell side. Jean-Pierre Fumagalli, founder and CEO of Smartclip, is someone whose company has successfully straddled both markets. Founded in 2008, Smartclip was acquired by Adconion last year and trades 750 million video streams on behalf of 500 publishers across Europe. In the first part of a two-part interview, Jean-Pierre explains how Smartclip started out and gives some insights into Smartclip’s experience with measurement, connected TV and winning TV budgets. Part 2 can be found here.
How did Smartclip start out as a company?
We’re different from other video ad networks. I’m from a TV background and back in 2000 I initially chose to move into online as I thought the online companies would start to buy up all of the TV rights.
However, I quickly realised I was about ten years too early once I learned more about the Internet space. When video traffic started to get going, we started this company as a pioneer and soon we were receiving lots of attention in the market and managed to get a dominant market position.
It was always clear to us that we are living in a digital multi-screen world, and sooner or later all of the TV screens will become interactive as well. We are convinced that all television advertising will be served using ad server logic as we were already familiar with online. We were sure that there would be a massive change in the way TV advertising is bought and sold and there would be a huge space in the market for new entrants who will work alongside the big traditional TV houses.
When we started the company video consumption was mainly via the PC, so that’s where we started out but we were always completely focused on in-stream inventory, selling ads before and within video content. When connected TV arrived we were the first ones to serve ads on the Sony Playstation back in 2009, which offered a significant installed base.
Since then we’ve been constantly developing our multiscreen approach and now we’re helping to monetise over 70 apps, which constitutes a majority of the apps available on connected TVs, and we currently serve ads onto all of the connected TV devices.
However, advertising on connected TV is still a small market and only makes up a small part of our revenue, most of which comes from the ads shown on other devices such as PC and mobile. In the long term we believe connected TV will be the main driver of time spend and consumption. We’re already seeing users consuming on average ten times longer digital content on connected TVs than they consume content with PC.
Has Smartclip had much success in terms of winning TV budgets?
Fifty per cent of our revenue comes from non-digital budgets right now. We mainly sell to agencies who are repurposing their ads for digital delivery on multiple screens, from connected TV to PC to mobile. We feel like we’re right at the centre of things now. At the moment we’re seeing growth in the number of overall connected devices and while at the same time the digital and the classical division of agencies moving together forming one team, same thing on the consumer’s side.
How has connected TV inventory been performing in comparison to other other forms of video advertising?
At this point the full potential of connected TV isn’t properly understood and used. But technologies are evolving quickly and we are starting to see new input mechanism. For example, this year Samsung is introducing motion control, voice control and face recognition. So there’s still work to be done in terms of content, input device and how people control their connected TVs. What metrics have you been using for measurement? We use our own metrics that we get from our ad server. All of the ads we’re running on different devices are served using our own technology stack and we can provide reporting to advertisers for every metric that we can measure. However, that’s just the technical side. The branding metrics can only be measured by extra studies and we have to approach that differently in different markets. For example, we’re working with Comscore who have video metrics, GRP metrics and site reporting, but then we could be working with someone else – Nielsen, for example – in another market. However, most of the metrics are only designed to measure the effectiveness of PC and mobile campaigns. The panels used for TV aren’t being used for connected TV because it’s still on an early stage. Measurement companies like Comscore obviously need people to buy their reports so I think they’re holding off until the market gets a little bit bigger. I don’t think we’re going to see metrics from those big independent providers for the next 18 months. What stage are we at in terms of being able to track users from connected TVs to other devices? At the moment that’s only possible with services that have user logins, like Facebook and Skype. However, technologies are being developed that will be able to deliver ads to the same user across multiple devices. The TV manufacturers have all of the necessary information about users from their connected devices. It’s just a question of making that data available and matching it with the cookies you have from other devices. At Smartclip we are already started to do it, but at the moment the opportunities for doing this are still very limited. For the future this will be the main growth factor to deliver efficiency and driving revenue to connected TVs. How long before we see ad servers being used to dynamically serve ads into linear TV as standard? This is already happening in some cases of linear IPTV delivery. But if you’re referring to the traditional TV channel that is not being broadcasted via IP – we are still far away from that. From a technology point of view your Connected TV set knows exactly which channel you’re watching and when the ad break occurs. This is a basis for a scenario where 5 million people watch the same game as it’s broadcast, but in the ad break you have targeted ad delivery via IP technology. This still needs to be developed, but the larger TV stations are not embracing such business models since that would threaten their exclusivity they have on ad delivery, so it’d definitely not something they are looking at right now. Is Smartclip’s inventory RTB-enabled? The Adconion Media Group and smartclip have their own RTB technology. In fact, we are the first video advertising company in Europe who is already using these technologies. Although the bidding enabled video inventory is mostly still small and working with static pricing. The video market is still non-standardized and video ad formats and devices are evolving. As a consequence there is not enough market liquidity yet for standardized RTB inventory that would lead to fair market prices. The market needs market-makers who can educate and who know the value of the individual products for both publishers and advertisers. Read Part 2.
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About the Author: Vincent Flood
