Some of the best posts that I’ve read on entrepreneurship were written by Marc Andreessen, founder of Netscape, Opsware, Ning and most recently venture capital firm Andreessen Horowitz. While his blog is no longer available at its original location, his posts can be found here. My favorite from the Guide to Startups series, titled ‘The Only Thing That Matters’, discusses the concept of Product/Market fit – the stage that a startup has reached when it is “in a good market with a product that can satisfy that market”.
Innovid, a New York-Headquartered company which maintains an R&D Center in Tel Aviv, has developed a “clickable canvas” technology which enables advertisers to add interactive capabilities to new and existing video content. The solution includes an ad server for ad placement as well as an analytics dashboard for mapping user engagement.
Tal Chalozin, Co-founder and CTO of Innovid, recently shed some light on the company’s journey to date. Particularly interesting, and related to the concept of Product/Market fit, is that the company first went to market with a focus on providing the technology for product placements in online video. This offering failed to garner sufficient traction in the marketplace, despite accolades from the technology press.
The main problem was that, despite the widespread interest from potential advertisers, the actual application was not narrow enough in scope – overlay video ad technology is too broad a concept, and Innovid’s willingness to fully customize it according to client needs was (perhaps surprisingly) a shortcoming. Further, the video advertising value chain was not easily penetrable due to the need for publisher adoption – a classic chicken an egg problem.
The company, which is headed up by Co-founder and CEO Zvika Netter, was quick to realize that it needed to adapt in order to find success in the marketplace. This renewed focus led to the development of their iRoll product. iRoll offers advertisers an interactive pre-roll video ad solution, which allows advertisers to repurpose their existing video content to provide interactive advertising experiences immediately before the screening of featured content.
The iRoll product has demonstrated that it is highly engaging for consumers, particularly relative to standard pre-roll ad solutions. Innovid’s metrics suggest that standard pre-roll ads have not performed well, with click through rates (CTR) of just 0.4%. In contrast, deployments of iRoll have achieved a CTR of 5-8%. Chalozin suggests that this performance gap exists due to the interactive nature of these ads – they “reward attention rather than demanding it”.
To solve the distribution problem, the company has a sales force which caters to both agencies and publishers. In order for the system to work, publishers need to be Innovid certified – this requires a simple 3 step integration process. Innovid has recently certified some major US media companies, which provides a foundation for catering to advertiser demand.
Innovid has a global operation and a total of 16 staff – 4 located in New York and 12 located in Israel. NY-based Chalozin indicated that their US presence has been essential for liaising with prospective clients and publishers. Further, Innovid has been very actively involved with the Interactive Advertising Bureau in developing and applying standards for online video ad formats – this involvement would not have been possible to manage remotely from Israel.
Innovid represents a breakthrough in interactive video solutions for advertisers. The company received praise from the World Economic Forum by being selected as a Technology Pioneer for 2010 (past Technology Pioneers have included the likes of Playfish and Admob). No award can substitute for market traction but, judging by the management team’s market responsiveness to date, Innovid will continue to navigate towards the most promising opportunities in the rapidly growing online video advertising market.
