The newly formed Velocity Interactive Group (Jonathan Miller’s and Ross Levinsohn’s vehicle for investing in digital media) is making its first investment: $10 million in video ad network Broadband Enterprises. Already one of the largest video ad networks and producers of video commercials for the Web, its video ads reach about 45 million people a month through 1,800 affiliate sites. In comparison, video ad network Tremor Media, which raised $11 million on Monday, reaches twice as many people. But video is hot, and whoever can scale the fastest will be sitting pretty. As Miller (the former CEO of AOL) tells me:
The agencies want to deal with a handful of people. They can deal with a dozen sites—the Security Council. They can’t deal with the General Assembly. So the game is really about can we be one of the 10 or 12 that they deal with. Scale matters.
Broadband Enterprises CEO Matt Wasserlauf estimates that his company streams 200 to 300 million video ads per month. He says that advertisers like American Express, AT&T, Honda, McDonald’s and Proctor & Gamble like his Vindico video ad software because it reports back metrics immediately in terms of time spent watching the ads and click-throughs. (With some other competing video ad platforms there is still a delay in when advertisers get that feedback).
Even though the New York City startup was formed four years ago, this is the first outside money it is taking. Velocity is putting up the entire A round itself. “They are cash-flow positive and making money today,” says Miller, on tens of millions of dollars in revenues. That’s an easy investment decision.