With such a sizeable percentage of fraudulence, the viewability issue inspired innovation and guidelines within digital advertising.  By detecting both the advertisement’s size and position on the page, the technology now exists to detect the viewability of display and video advertisements.  Right?

Well not entirely.  Both display and video have small quirks when independently determining viewability.  Perhaps counter-intuitively, display is the trickier of the two.  Just because a display ad is beneath the fold – the area of the webpage viewable on the screen – doesn’t mean that the ad was not viewed.  Determining the viewability of a display ad requires a calculation of the probability that a user scrolled the necessary distance down the page.

Independent video viewability, however, requires the knowledge of auto-play.  The rationale here is simple.  If the ad is on auto-play and beneath the fold, the user did not view said ad.   Yet, the majority of ‘video viewability standards’ do not detect auto-play.  Consequently, any advertisement running on a video beneath the fold, even if NOT on auto-play, are categorized as non-viewable, resulting in lost revenue for the publisher.

This is, in essence, why auto-play is the crux of video viewability.  Auto-play detection allows for an independent and accurate measure of an advertisement’s viewability. Considering viewability is already a large concern for publishers and advertisers alike, it is crucial that the industry moves agrees how to properly discern viewability.  That way, when viewable impressions replace served impressions as the standard measure for online advertising, the entire industry is poised to move forward together.

Yet, Accordant Media predicts that 2013 will see an increase in the price of CPMs as demand catches up to supply.  As described, however, the demand is one-facted.  The study assumes that more players will enter the RTB world and thus drive up costs.  This would make sense except, if the past years have told us anything, video inventory is only going to continuously grow at an increasing pace. Moreover, the supply of new premium content has been nearly stagnant.  This combination will dampen any CPM lift expected by the increase in demand.

Last week, at the BrightRoll Video Summit in NYC, Ran Hanervo of AOL and Kristin Haarlow of Spark Communications engaged in a session about premium content.  When asked how Spark ranks content, Haarlow stated that there are three tiers.  Premium, Tier 2, and Tier 3.  Later in the conversation, Hanervo conjectured that the Tier 2 will eventually collapse into the top or bottom tier.  Citing AOL as a Tier 2 publisher, he of course aims to collapse up.  For most Tier 2 publishers, however, collapsing down is the more likely scenario

Which of course makes sense.  As the ease of RTB drives CPMs down, publishers are less inclined to create quality.  As quality decreases, CPMs will go down, and so the cycle will drive Tier 2 publishers into Tier 3.

That all said, I believe there is a way to reverse this trend.  The solution is to increase the percentage of videos that are seen as Tier 2 or Premium level of quality.

The industry discredits user-generated content (UGC) because of quality and brand safety.  That said, UGC allows certain marketing tricks that aren’t allow on premium.  For instance, a baking enthusiast uploads a how-to video for their favorite chocolate chip cookie recipe.  To the entire advertising world, this is not premium content.  However, were RTB to take the video’s content into account; then the video could be sold at a premium to certain brands, in this case Nestle who manufacturers the chocolate chips.

What UGC lacks in quality, it often makes up for in popularity and targeted reach – the niche audience of certain clips will almost always be the target audience of brands associated with that sector, like the how-to for cookies.  By leveraging the video’s content, the RTB industry would greatly increase the percentage of videos sellable as Premium by targeting specific brands, and thus raise CPMs.  Moreover, this trend would incentivize publishers to create quality video because each video has the chance of being sold at a premium.

With that in mind, Veenome is happy to announce Veenome Viewability: a new video ad standard delivered via our indexing API product.  This new product provides information on the viewability of a video ad.  Take this case as an example: if a pre-roll advertisement is set on auto-play and the video is below the fold(the viewable screen), then an impression is registered and paid for with nobody actually seeing the ad. By detecting auto-play, player size, and position, and muting Veenome is able to tell how valuable every impression is. This data is delivered to ad networks and publishers who can make their own decisions about how to measure this increasingly important metric.

By leveraging these metrics, Veenome’s Ad Network, Exchange, and RTB customers are able to develop their own standards for video ad viewability.  For instance, if the video is more than 50% above the fold and set to auto-play, the impression could be classified as valid.  If the video is set to auto-play and below the fold, the impression could be classified as invalid.  By allowing each customer to define their own standard, our product can be catered to fit each of their individual needs.  For instance, the customer could choose to have the presence or absence of audio during auto-play could impact the validity of the impression.

In addition to the elimination of various forms of impression/pre-roll fraud, Veenome Viewability brings further transparency to the rapidly growing video ad industry.  Numerous Veenome customers are currently in BETA with viewability detection and will be in live network usage in Q2 2013.

Before I delve into my personal take on social media from a business development perspective, I’d like to give a shout out to this city I call home. Ask any person on the street where most startups call home, and they will say the Valley; ask where big advertising companies are and they will tell you NYC.  Yet, Veenome, a startup who sells B2B to digital advertising networks, is located here in Washington, DC. The question is, why?

As I said recently in an interview with TechFaster, DC is an excellent place for entrepreneurs, and the entrepreneurs here know it. The reason? Let’s take a look at the facts. First of all, DC is not just DC. DC is able to pull resources, talent, and investment from both Maryland and Virginia. All three of which ranked highly for Total VC Investment Per Capita in 2012 (7, 10, and 11 respectively).

Secondly, it’s the Capital. Tonight, is the SMWDC Keynote and the speakers are all tech powerhouses: Linda Abraham, Co-Founder of ComScore, Steve Case, Co-Founder of AOL, and Aneesh Chopra, Candidate for Lt. Gov of VA. Yet there is more to the picture. Aneesh Chopra was the first CTO of the White House. Earlier this month, Steve Case pitched to Congress StartUp Act 3.0, a bill that would make it easier for entrepreneurs and STEM graduates to obtain visas. Oh yea, he is also CEO of Revolution, a DC-based VC firm.

Being in the Capital has two major benefits.  One, as I outlined above, those who invest here are those who shape the policies that govern entrepreneurship on a national level.  Two, the government is a major source for projects and revenue.  Many startups in this area gain early traction due to government interest.  Moreover, a government grant is sort of like an investment… minus the equity.  If DoD wants you to develop a product, they give you the money to do so but instead of owning a portion of your company, they later buy the right to use the product they paid to develop.

One final thought. The year is 2013. Veenome doesn’t need to be in NYC because we can do our business development and testing via internet. Should a face-to-face meeting be necessary, it’s a $79 flight from Reagan National to Long Island MacArthur. When an investor from outside the region is interested, they email or call the company. As we as a society move forward, business location will be less about the proximity to certain businesses and more about state tax credits and other financial incentives.

Now, social media. It’s obvious why companies like Nike have a Facebook and Twitter. It is a free avenue, save promotional ads, to inform your consumer base of new offerings, deals, and the like. Moreover, as my friend Valerie Coffman at Feastie recently pointed out, blogs are the most influential form of social media when it comes to consumer products. Yet, Veenome operates in the B2B space, so why have social media?

The exact same reason, of course. Social media is a free way to inform your potential clients of what you can do. More to the point, social media is a way to directly respond on an ideological level to the needs of your potential clients. Case in point, there has been a lot of discussion recently surrounding Real Time Bidding in the digital advertising world. This conversation is almost completely carried out through blogs by both the tech companies involved and advertising-news companies (think AdWeek, Ad Age, MediaPost) each responding to each in turn.

That brings me to Twitter and Facebook. Obviously, they have the function of promoting and following said blogs as well as press releases, new products, and client signings. Moreover, ask anyone engaged in social media about alliances. Different companies willingly help promote each other in a true scratch my back and I’ll scratch yours fashion.

Yet most importantly, even with B2B business development there is power in Retweets and Likes. If you are in the business of promoting your business, then it behooves you to follow up with seemingly interested parties. As such, business conversations start with something as simple as a retweet. Why? Because the most common follow-up to a retweet is recon on LinkedIn and fortunately for business development employees everywhere, LinkedIn Premium tells you who has been scouting out your profile. Moreover, it tells you their position within the company. So from a simple retweet, one can obtain initial interest and a possible ‘in’ with a potential client. That is the power of B2B social media.

All in all, I hope I gave some honest praise for both DC and the business uses of social media. That said, if you haven’t already, log onto Meetup.com and go enjoy SMW2013. You may be surprised by what you learn.

According to Loechner, “The panelists all believe that video and RTB are ready for each other, but there needs to be a shift in perception before the connection happens the way everyone envisions.”   After that agreement, however, opinions began to differ.  Scott Ferber, CEO and Co-Founder of Videology, believed that RTB should place ROI highest above everything else.  Meanwhile, Eric Franchi, co-founder of Undertone, said that RTB should operate like TV, not display.

This issue comes down to whether transparency matters or just ROI.  Anthony Risciato, GM of VideoHub, agreed with Franchi stating that the brand marketer must be gifted “absolute transparency into what they are getting out of that bid” by focusing on brand awareness, favorability, and engagement.  At the end of the piece, Loechner concludes that although RTB and video should be ready for each other, the technology, measurement standards, and fundamental ideas are not yet ready.

Well, that used to be true, but now the necessary data exists. While the conversation surrounding metrics will continue until the industry chooses a strategy standard, the other pieces have fallen into place.  The technology exists to, at least on some level, ensure engagement.  In fact, Franchi probably felt so confident  during the panel because he knew the Undertone was just about to release its “Viewability Guarantee”, assuring that ads are actually seen by viewers.

The other piece to make digital advertising like TV is content targeting.  The World Wild-Life Foundation knows to advertise on the NatGeo (National Geographic) Channel and Animal Planet because that is what animal enthusiasts watch.  Audi knows to advertise during an episode of Top Gear because that is what auto-enthusiasts watch. Basically, TV advertising is so effective because the ads are based on content above all else. When online and mobile advertisers begin to target their advertisements based on the content of the video, digital RTB will finally operate just like TV.  Once that happens, ROI is sure to follow.

So if the mere existence of porn on Vine really wasn’t a huge deal, why the hype?  While admittedly an interesting talking point, the phenomenon is nothing damning.  That was until Monday Morning when the very NSFW (Not Safe For Work) clip “DildoPlay” appeared in the ‘Editor’s Pick’ section of the app.  Big mistake.  To put the situation in perspective, in February 2012, Viddy had their video sharing app pulled from the App Store due to ‘sexually charged material.’  All of a sudden, Twitter and Vine found themselves in the center of a much publicized episode, one which they had 100% of the blame.  Or did they?

According to Twitter, the cause of the mistake was human error:

A human error resulted in a video with adult content becoming one of the videos in Editor’s Picks, and upon realizing this mistake we removed the video immediately. We apologize to our users for the error.

We are in the age of big data, especially when it comes to the internet.  Cookies can tell advertisers which sites a user has been to.  Crawlers can scan millions of web pages and tell you their content.  Yet, there is still one place where the internet has no data: video.  Whether as advertisers, publishers, or apps, the actual content of video remain an irretrievable piece of data to those who interact with them most.

Imagine, however, that there were a way to analyze video and know its content.  The Vine mishap never would have happened because the NSFW clip would have never even been allowed to contend for an Editor’s Spot.  As soon as the video was uploaded, it would have been flagged as NSFW and that would have been that.  No reliance on fellow users reporting the nature of the video.  A purely automatic moderation system.

Thus, the content of a video is possibly the most important piece of data concerning said video.  Until those associated with video are able to obtain that data, there will always be problems of this nature, whether it is an NSFW accidentally making the Editor’s Pick section, or a brand advertising on objectionable content.

According to Aaron Smith of CNN Money, the price of a 30-second Super Bowl spot this year is $4 million dollars – a new record-high.   Spending that much capital is quite a gamble even if you take into account that an estimated 111.3 million people watched in 2012.  With that in mind, many brands are using the newest developments in digital advertising to ensure that they achieve the most “bang for their buck.”

Let’s look at some numbers from MediaPost and Unruly.  Last year, many advertisers released ads before the game, allowing social media to create the hype.  Consequently, 75% of the top 20 shared (defined as posting on social media) Super Bowl ads launched before Game Day.  Apparently, this was a crucial move as those same top 20 shared ads accounted for 92% of all shares.  The final kicker, 55% of Super Bowl ad shares happened more than a month after the actual game.  That means that if an ad breaks into the top 20, their associated ad is shared often and for quite a long time.  If the brands hope to achieve virality, the ad spot needs the power and presence to make an impression on as many viewers as possible.

Though the majority of brands launched their ads before Super Bowl Sunday in 2012, many brands are rethinking that strategy in 2013.  While some brands will undoubtedly still release the full commercial ahead of the game, other brands are getting clever.  There are three sweet spots for gaining coverage and virality: before the game, during, and after.  Why limit your engagement to one spot in 3 places?  Use 3 different spots instead.

Check out Mercedes-Benz for example.  SPOILER ALERT: Mercedes-Benz has released a ‘teaser’ for their Super Bowl commercial.  The scene is set with the always stunning Kate Upton.  As the video clip progresses, the shot cuts out to the words “Kate Upton… Washes the New Mercedes CLA… In Slow Motion ”.  Boom: Virality.  In one extremely cheap teaser, Mercedes-Benz has cemented an anxious following for their Super Bowl spot.  That Super Bowl spot will clearly, and hopefully, be Kate Upton washing the new Mercedes-Benz CLA; and it is almost guaranteed, that in the weeks that follow, Mercedes-Benz will continue to garnish coverage through media followups.

For some brands, however, $4 million is just too much money to spend in one place.  Not to worry. For the second year in a row, the game will stream via the Internet and, for the first time, on Mobile (albeit this time through CBS, not NBC).  Needless to say, when there are commercials on TV, there will be commercials in stream.  While the specific price of these second screen ads have not been disclosed, they are assuredly significantly less.  In fact, some brands who did buy television spots are supplementing those ads with concurrent second screen ads.

The advertisers aren’t the only ones taking advantage of second screen technology.  Through the stream, CBS will offer four unique camera angles, the ability to pause coverage, check a customized Twitter feed, and ‘deep social media integration’.  That deep social media integration will allow viewers to quickly share their favorite stream AND television commercials.  This has allowed brands to ‘gamify’ their commercial experiences. For example, Coca-Cola is letting viewers choose the ending to their commercial.

This year promises to be the most engaging Super Bowl experience to date.

Before looking towards the future, let’s take a look at the history of T-Commerce.  Arguably, the first account of true and purposeful T-Commerce was in 2001.  NBC’s Will and Grace featured a $52 dollar T-Shirt in one of their episodes.  After the show, viewers were able to buy the shirt via the network’s website.  18 hours later, over 3,000 people had purchased the shirt equating to over $150K in revenue.

This was where the idea began.  What if advertisers could provide a simple way for consumers to purchase the objects they see and covet in televisions show?  Surprisingly, 12 years later, the idea is finally just getting moving.  While E-commerce and M-commerce (mobile commerce) have advanced from an idea to a reality, consumers, in large part, are still rather incapable of purchasing the items they see on television directly.

Lucky for us, all that seems to be changing.  Near the end of last year, American Express introduced T-Commerce to the Fox show New Girl.  Fans are now able to buy items that they see on the show through Fox.com.  Moreover, the advent of 4^th screen means that consumers are able to interact and purchase items through their mobile device.   Strictly speaking, however, this is not true T-Commerce.  This is advertisers, networks, and other interested parties providing non-television means to purchase items they see on television.

I know what you’re thinking, “But, I want true T-Commerce.”   Well don’t worry reader.  It’s already here, you just might not know it.   The first ‘company’ worth mentioning is Canoe Ventures , a consortium of cable companies.  Through an in-screen widget, viewers maintain a live feed while browsing related merchandise with their remote. Comcast and TiVo (partnered with PayPal) also offer extremely comparable similar services and experience.  Furthermore, there are a number of startups who aim to only make T-Commerce more ubiquitous as well as more interactive.  If you would like to get an idea about what T-Commerce will bring in 2013, I suggest you head on over to CES, there’s still time.

So there you go, I am officially proclaiming 2013 as the year of T-Commerce.

Our second gift is the fourth preview of the 2013 International Consumer Electronic Show (CES). Today, we will be discussing The Future of Enhanced Advertising: Addressing Brands, Message, Technology, Media and Entertainment (Jan 9, 12-1pm, LVCC, North Hall N258)

We live in a highly connected society; that is a truth that is here to stay.  Moreover, the prevalence of ubiquitous internet and the rise of mobile have completely changed how we interact with each other, with content, and with brands.

Brands and advertisers have greatly capitalized the internet and are doing the same in mobile.  Advertisers are great innovators.  For instance, 4^th screen advertising, a concept that did not even exist a year ago, was developed as a way to reach consumers on multiple platforms at the same time.  At the same time, however, mobile is not the end all be all.  The landscape will continue to change. With innovation and products such as ‘Google Glasses’ in  development and beta, who knows through what medium advertisers will reach consumers in the future.  That, in a nutshell, is why this is a session worth going to.

This session should give a solid overview of technological advances and how the media and advertising industries are preparing to capitalize on the opportunities.  The moderator will be Mike Wiese of JWT.  The panelists are quite diverse, containing superstars from media, advertising, and tech companies.  They are Fred Bucher of Time Warner Cable Media, Mark Fortner of Digital Fusion, Jason Jercinovic of Havas Worldwide Digital, Xavier Kochhar of Media Link, Brody O’Harran of Xbox Live Advertising Sales, and Stewart Pearson of Wunderman.

This session promises to be a very grounded discussion.  Facial Recognition is an idea that has been tossed around for decades.  However, most of they hypothesizing has been about the HOW, not about the AND THEN?  We, as a populace, have been looking forward to this technology.

Well, now its here.  It was not so long ago that Facebook began talks about auto-tagging.  In fact, auto-tagging may be the first time the mainstream populace began to wonder about the implications.  What if I don’t want to be tagged in every photo?  Will I have to detag myself?

Slowly, it dawned on everyone that maybe unrestrained facial recognition is not such a good thing.  Moreover, what if all the facial recognition systems are not independent.  Does the technology that recognizes me at the grocery store also recognize me in the mall? Do I want it to?  Do I have a say?

On the other hand, facial recognition related advances are some of the most promising in the counter-terrorism and foreign relations sectors.  Via facial tagging, a system can monitor multiple video streams and recognize when a prominent authority is speaking.  Needless to say, this is much more efficient than having an actual person watching.  The ability to identify and isolate pertinent videos will increase the overall efficiency of  many an organization.

All that said, you can see why I am excited to attend this session. This issue is only going to move more center-stage as the technology continues to advance and become more ubiquitous. The presenter is none other than Maureen Ohlhausen, Commissioner of the FTC. The moderator will be Tony Romm of Politico Pro.  The panelists are Clyde Wayne Crews Jr. of Competitive Enterprise Institute, Pam Dixon of the World Privacy Forum, and Berin Szoka of TechFreedom.

When I first looked at this session, I thought it was going to be mainly a lesson in how video content has expanded through our existing media.  A nice history lesson and maybe some thoughts for the future.  Then, however, I looked at the description.

Source: CSE

At their core, the broadcast and cable industries have always been a video-delivery technology. With video central to how consumers experience their daily lives — whether by broadcast, cable, mobile or broadband — television’s video infrastructure is ideally positioned to respond to the way consumers now communicate.

The last little bit really intrigued me: ‘television’s video infrastructure is ideally positioned to respond to the way consumers now communicate.  I began thinking about what this could mean.

The broadcast and cable industry has existed for over 75 years.  For the longest time, television was the heart of video content.  Now, however, the mobile and internet have carved out a huge chunk of video industry.  Not only has the way we watch video changed, but also the way we communicate.  At the beginning of television, a family would sit around the set and all watch the same program.  Now, we are much more independent in our content consumption.

My intuitive sense is that mobile is the most ideally positioned with regards to communication.  So, I did some research. According to BroadBandTVNews, the video infrastructure market grew in revenue 11% from Q2 2011 to Q2 2012.

Ah, so here is what they mean.  Over its lifetime, television’s growth and popularity necessitated an ever growing expanse of information storage and transfer technologies.  Concurrently, our means of communication have grown to expect the ability to transfer large amounts of information very quickly.  (How often have you overheard: Why is this photo taking 3 seconds to send?)

Back to the point, I am looking forward to this session because it promises to delve into a side of the equation usually invisible to the user.  As time progresses and we send bigger files faster, by what avenue is the information being sent?  Which technologies will allow this trend to continue in the future?

The discussion will be lead by Jerry Belson – US Media & Entertainment Sector Leader, Deloitte LLP.  The panelists are listed below.

Since there is ample time, I have decided to highlight one industry-specific session each week until CES opens its doors.  This week I am focusing on Contextual Media and Advertising: Transforming and Redefining the Relationship Between the Consumer, Advertising, and Media Platforms (Jan 7 230-330pm @ N258).

First, I am quite pleased that this session is scheduled so early in the overall program for it is presently the defining topic in digital advertising.  Save good old fashion cable television, the advertising industry has fully adopted the big data theory.  Seems a little obvious, the more known about the individual consumer, the more targeted advertisements can become.  The more targeted advertisements become, the higher ROI on the overall ad campaign.

Yet, if it is so obvious, then why is there any need for discussion?  The answer is two-fold.  1) The technology is moving rapidly e.g. Real Time Bidding.  New companies are sprouting up all the time and the industry is seeing an increasing number of Strategic Partnerships.  2) There is a debate within the industry about which data sets matter.  For instance, should we pay more attention to the user’s browser history, their geographic location, the Content of Video, or some combination, etc.   This panel promises to delve into these issues, especially when you consider the players.

The panel will be moderated by Doug Scott, President of OgilvyEntertainment.  The panelists are Laura Caraccioli, EVP of Advertising at Electus; Chris Hayes, Managing Director of Business Development at Huge; Joan Hogan Gilman, EVP of Time Warner Cable; Bettina Sherick, SVP of Digital Strategic Marketing of Twentieth Century Fox; and Kristine Welker, CRO of Hearst Magazines Digital Media.  Needless to say, this panel packs quite a punch.

Let us return to DataXu.  As I said in part 2, DataXu has listed on its website 39 different partners.  The truth is, however, not all of the companies listed are indeed partners, some were legitimately acquired.  Yet, the overall point still remains. In a more conventional industry, DataXu, to achieve the same end, would have had to acquire the majority of those companies.  This process would have greatly hindered the speed at which DataXu was able to assemble the product they offer today.

Simply put, acquisitions are much more expensive than partnerships. Moreover, the time lost associated with that decision is compounded each step of the way.  So while acquisitions are still a large part of the digital advertising industry, there is also a history of partnerships.  Partnerships, I might add, that form quite a complex and interconnected network.

The constant is that each partnership is built out of a want to produce a better offering.  For instance, if a Demand Side Platform (DSP) realizes that it needs a Real Time Bidding (RTB) Solution to be competitive, then it behooves the DSP to partner with a company with the technology.  The DSP could acquire the company, but that may not happen for two main reasons 1) if it’s a relatively new company, it doesn’t have the capital and 2) It is generally safer to use a partnership as a test, instead of jumping into an acquisition

So instead the DSP and the RTB tech company form a partnership.  That allows the RTB tech company to also form a partnership with any number of DSPs.  Also, if the RTB tech company wants to strengthen its offering, it may partner with some 3rd party data aggregators to better optimize its algorithm.  These 3rd party aggregators may or may not already be in partnership with any number of the DSPs.

The entire process and network is very complex and very fluidic, but that’s the key.  Since the industry is chock-full of partnerships, any new company with a better system or idea finds a wide variety of interested parties.  On the flip side, each established company is always looking for that new technology that gives them an edge over their competitors.

Consequently, the entire industry, not just one lucky company, is quick to absorb all types of innovation.  Each new technology promotes a new ‘land-grab’ that then inspires greater innovation.  All the while, the brands running the campaigns are seeing increased ROI and as such are increasingly willing to commit resources; thus the industry grows.  That is why the prevalence of partnerships has allowed the digital advertising industry to be one of the most innovative of our time…

Adconion Media Group(AMG) is a Digital Distribution Platform (DDP) powered by a Data Management Platform (DMP).  As you can see, neither of these acronyms are mentioned in the explanation above.  That is because AMG is the product of a need, a need for campaign firms to coordinate efforts across all media channels, thus digital distribution platform.  What began as an effort to homogenize data across platforms became a much fuller offering, integrating CPM optimization and analytics.  These facets of the AMG offering, however, were not created by AMG itself.  Instead AMG contacts out to companies, such as BlueKai and MediaMind.

AdExcite is a video advertising network.  Generally, video ad networks sell impressions, on a number of websites through a DSP to the campaign firm.  Yet, through partnerships e.g. Exelate, AdExcite itself uses data to provide an optimized targeting solution. This allows AdExcite to have direct conversations with campaign firms, instead of negotiations with DSPs.  Once again, we see that a company has used partnerships to achieve greater functionality.

Adotube is an in-stream advertising technology company. Originally, Adotube developed technology for embedding advertisements in video.   From that point, Adotube has evolved into a complete video advertising platform, offering campaign management, a full ad network, and analytics. Once again, however, many of these offerings are provided through Adotube’s network of partners.

Finally, let’s look at DataXu, the first company to do it all. DataXu fulfills every roll described above: campaign and audience management, attribution management, cross channel media buying, complex targeting, and analytics.  How did they do that?  DataXu has listed on its website 39 different partners of varying functionalities.

As you can see, each of these companies has strategically used partnerships.  In Part 3, I will explain why this phenomena of partnerships has helped increase the overall innovation of the digital advertising industry.

Before I delve into the relationships, let me first enumerate the many players:
1. Company A – wants to buy advertising
2. Company B – runs Company A’s advertising campaign
3. Company C –  buys advertising space for Company B

For example, Company A wants to create or reinvent a digital marketing campaign. First, Company A would hire an outside firm, Company B, to run the new campaign. Company B would be in charge of running the initial ads and tailoring the campaign in response to end analytics. Next, Company B would sell the content through Company C, a Demand Side Platform (DSP). Company C contracts many 3rd party aggregators to learn actionable data about the users, generally acquired via cookies. Finally, Company C would bid on an impression on an ad network (across all channels). This bidding would be optimized using the data from the 3rd party aggregators.

What is interesting here is the development of long-term partnerships. In addition to acquisitions, partnerships have become a viable method for increasing resources. Companies are seeing benefits by partnering with other companies to fulfill certain services. In Part 2 of this series, I will describe some specific companies as evidence for successful partnerships. Finally in Part 3, I will explain why this phenomena of partnerships, has helped the digital advertising industry to be one of the most innovative of our time.

1)      New Media Strategy: How to Use DMPs, DSPs, RTB & Beyond.

As we all know, the techniques used to buy digital media are changing.  New technology has allowed the reality of Real Time Bidding.  This new strategy allows ad networks to judge each media space independently on a variety of factors.  The effect is a more efficient and less costly marketing strategy.  This session promises to delve into the ins-and-outs of RTB as we know it today.  That said, I am mostly drawn to this session due to the ‘& Beyond” part of the title.  Adding to the appeal are the speakers: Hassan Babajane of BlueKai, Rich Astley of Videology, and Eugene Becker of Xaxis.

2)      Big Data: Interpreting Multiple Data Sets to Understand you Customers Today & Tomorrow

Once again, this is not a new concept.  The tech community has been lauding Big Data for quite some time now.  The real development here is once again the idea of run time.  With today’s cloud computing capabilities, large data sets are able to be constructed, relayed, and analyzed in near real time.  Within the advertising community, this means a greater ability to engage customers.  Reed Hornberger of SAP is joined by Will Ferguson of 1-800 Flowers, Matt Crenshaw of Discovery Digital Media, Ramsey McGrory of AddThis, and Claudia Perlich of Media6Degrees.

3)      Effective Targeting: New Ways to Find and Reach the Perfect Customer

This is by and large the session I am most excited for.  In today’s adverting world, targeting is everything.  It is what drives the innovation. Furthermore, it is a player in every controversy: from DNT to metrics.  More to the point, the conversation begins with how we should target: contextual vs social vs behavioral vs content.  While all these have some overlap, the choice has very real consequences in the overall success of an advertising campaign.  Although I don’t expect this session to explore new technologies and innovations as much as the others, it is still very much worth attending.  The session will be led by Dimitri Maex of OgilvyOne New York with Erin Kelly of Enlighten, Allie Kline of 33Across, Dan Kersten of Kimberly-Clark, and Vijay Sundaram of SocialTwist presenting.

As you can see Ad:Tech New York will have plenty to offer.  The above is only a sampling of the sessions available.  Overall, the sessions are varied in both content and target audience and offer something to anyone in the digital advertising industry.  One final thought: it is always worth dropping by the ‘Startup Spotlight.’

RTB is a new technology to the advertising industry.  Prior to RTB, advertisers would reserve advertising space, usually in blocks of 1000. These blocks did not take into account where the ads would be played or who the user was.  As a consequence, a large percentage of the ads were not seen by the target audience.

 With RTB technology, however, advertisers are able to bid on each ad impression.  Demand Side Platforms (DSPs) gather data about users, usually in the form of cookies, and sell that information to advertisers.  The data inherent in the cookies allows advertisers to better target their actual audience.  For example, if a user has recently been to a car dealership website, and has the related cookie, DSPs will recognize the cookie and sell that user’s ad time to companies in the auto-industry.  This analysis happens in real time and very accurately determines the true value of an individual impression.  The result for the advertiser is a higher conversion rate at a lower cost.  RTB Ad Networks are those utilize this strategy when selling ad space.

Given the growing size of the mobile ad space, advertisers are seeking ways to reach their target audience more efficiently.  One of the novel ideas is the use of private marketplaces, but these are in large part still being developed.  Another tactic has been geo-targeting.  While geo-targeting is a good start, it does not give mobile DSPs as complete a picture as their online counterparts have.  The stagnating factor is the difficulty inherent in accessing a mobile history or cookie base.

Nevertheless, the mobile advertising space needs a RTB solution.  Luckily, its 2012: the age of the startup and the age of innovation.  One startup with a mobile RTB solution, AdTheorent, Inc, has really been gaining traction. Launched in 2010, AdTheorent’s platform delivers what it calls Intelligent Impressions^TM.  Much like an online DSP, AdTheorent scans its mobile inventory and analyzes potential impressions based on a number of criteria.  It should be noted, however, that AdTheorent takes this one step further.  Rather than just returning the impressions, it uses its own predictive model to identify those most likely to result in conversion.  This is the kind of innovation the mobile advertising space needs.

One final thought, many mobile developers are hesitant to embrace advertising because mobile users are quite adverse to the phenomena, especially on smartphones.  The perception is that the possible revenue is not worth the risk of losing the user base.  That said, mobile RTB attacks both sides of this problem.  With the high level of targeting associated with RTB, mobile ads will become more relevant and appealing to the user. On the other hand, more targeted ads will mean a higher rate of conversion at a lower cost to the advertisers, i.e. increased revenue. As we have seen with online advertising, I predict that the mobile advertising space will see a great increase in RTB adoption in the near future.

For those of you not in the know, GRPs stands for Gross Rating Points i.e. Reach times Frequency.  According to Brett, “Right now there’s a lot of selection criteria when you buy digital. There is inventory and ad units and sites and audiences…”   He believes that by moving to GRPs, the digital ad buying process would be much simplified: “…with a digital GRP, you pick a daypart, you pick the quality of inventory, and then you’re buying an audience that’s validated, not by the vendor you’re buying from, but by the audience validation standard…”

While Brett raises valid points regarding the simplification of metrics, I believe that this is only the beginning of a paradigm shift within the advertising industry.  Brett asserts, correctly I believe, that the switch to GRP will better elucidate the truth of online advertising. Here’s what I mean.  Paying for 10,000 ad-plays is quite inefficient if only 10% of those plays are seen by the target audience.

By switching to digital GRP, the advertiser designates certain criteria and based on the criteria that ad will play at certain times.  Yet, as I said before, this is only the beginning.  GRP-based decision-making, with present technology, has a volume issue. Social video platforms are getting up to 10 thousand uploads an hour.  These uploads can be about anything and by anyone.  By pre-validating the types of videos and content providers your ad will run on, you lose out on a huge marketing opportunity.

Don’t get me wrong; changing upon which metrics you make decisions is a necessary first step.  Yet, a permanent solution must involve innovation.  In fact, with today’s present technology, using GRP limits the market size.  To properly utilize GRP, the digital advertising industry must have a way to validate each and every video upon designated criteria.  Moreover, this will need to be done in real-time.  Until such technology is the norm, online advertisers will continue to limit their ability to cash in one the growing digital media industry.

The reason for the malcontent is IE 10 will include a default “Do Not Track” setting.  As we all know, the argument for ‘tracking’ is it allows online advertisers great leverage in targeting their audience.   Moreover, a less targeted marketing campaign is less efficient and therefore less lucrative.  Of course, organizations such as the Association of National Advertisers (ANA) are suave enough to include benefits to consumers in their argument i.e. consumers are going to have to sit through ads either way, so they might as well watch ads they’re interested in.

In case you can’t tell, I have a few issues with this argument.  The ANA, and previously Microsoft, has developed the Digital Advertising Alliance (DAA) that would allow an opt-out option for those who are concerned about privacy.  The truth is, however, that the new IE setting solves the exact same concern but better.  Where the IE preference would assume no tracking and that effect would be carried to all websites, the DAA would assume tracking and only affect DAA-administered ads.

In theory, the ANA would see no difference in tracking volume with either DAA or IE 10 because either way, the ANA can only track consumers who wish to be tracked on DAA-administered sites.  This begs the question, why then would the ANA raise the objection?  My theory is that the ANA is factoring in the agnostic and ignorant populations, i.e. those consumers who do not care enough or do not realize that they can turn off tracking.  Furthermore, the revenue-opportunity of the population must be great enough to warrant the publicity… publicity, I should add, which goes against a seemingly for-consumers policy.

Secondly, and most importantly, the advertising industry has always prided itself in its ability to find opportunity despite constraints.  The ANA is against the IE 10 default because it disallows present-day techniques for target marketing.  I argue that the ANA, instead of publically denouncing a policy that will attract many consumers, should use the energy to develop or find novel targeting techniques.  As I said before, tracking works because if I spend a lot of time shopping for a specific item, then I should be given ads for items of that type.  This technique requires a lot of data spread over a rather long duration of time.  Surely there is a better way.

If I am watching an episode of Top Gear, my ads should be about cars and not about perfume.  An advertising company does not need to have tracked me to come to that conclusion.  All they need is to know what I am watching on a time-scale where the pre-roll ad can still be personalized.  Once we assume this is a possibility, as it is with Veenome (shameless plug), user tracking isn’t really neccessary.

Advertising Week – AWE by advertisingweek

From: Commentary: Video Metadata Critical for Online Video Advertising, Analyst Swartz

Is that good? Bad? 1 billion is a difficult number to grasp. 1,000,000,000. That’s a lot of zeros. Let’s break it down.

1 billion hours of streaming on Netflix equates to roughly 2,388 minutes per user. But is that good? Consider this. YouTube streams over 3 billion hours of video each month. Granted, YouTube has considerably more users than Netflix. The bottom line, however,  is this: the average Netflix subscriber consumes 5x more video than the average YouTube user, 10x more than the average Hulu user, and over 30x more than viewers of sites like Yahoo, VEVO, etc.

So Netflix is doing good business. But you might be missing the point if that’s the only conclusion you draw. The point is that their viewership is growing and shifting the TV paradigm month by month.

Netflix specializes in “long-form” professional quality video. You know, the kind of stuff you sit down and watch for an hour or two. In other words, they specialize in what, 5 years ago, most people would call “TV.” Slowly but surely, the once rigid concept of TV is being warped, Netflix leading the way. The online video company’s June numbers were great, but they get even better when you consider their growth from the 4th quarter of 2011. Minutes per subscriber grew from about 2,000 to June’s 2,388, an increase of roughly 19%.

What does that mean?

It very well might mean that people are becoming increasingly comfortable with the movement from traditional TV to new TV, redistributing their viewing minutes from cable to streaming video.

If the migration has begun, I suppose you could call Netflix the shepherd.

There are a lot of ways to answer this, but I’ll take a novel approach. To be painfully basic, let’s think of videos as moving images (hence the term “motion pictures”). They say a picture is worth a thousand words. If so, that would make a relatively short 2 minute video shot at 24 frames per second worth 288,000 words. Disregarding the obvious flaws and simplicity of my method, I think this analogy gets the point across. Videos contain a ton of data. But I’m only scratching the surface. To call a video mere “moving images” is to ignore a completely separate but equally important world of information.

Let’s look a little bit more at the universe of metadata that both composes and orbits videos.

Most simply, a video contains visual data. In second place for obvious content is audio data. You can see videos, you can hear videos. These two components are the primary and immediate concern of people viewing videos. But how did that person find that video? To address less obvious questions like this, you need to address the less obvious data contained in and around a video and the methods used to obtain this data.

Delving a little bit deeper, you’ll find there to be endless possibilities of less obvious peripheral data. There is text associated with the video. Number of views. Dates associated with the video. Number of shares. Specific objects in the video. Audio keywords. Specs on the camera that produced the video. A video contains much more data than meets the eye, it’s just a matter of harvesting it and putting it to use.

That’s what is so exciting about video: obvious utility as a medium of entertainment, less obvious utility in the mountains of information that surround them.

Believe it or not, this exact scenario has just hit the news. Several companies, including Virgin Media, have had their ads unknowingly placed next to content uploaded by neo-nazi extremist groups. Through the video site’s revenue-sharing program, the money paid for the advertisements placed next to these videos went, in part, to the extremist groups themselves.

The content of the videos aside, it goes without thinking that companies, especially those as public as Virgin Media would much rather their names remained unconnected to extremist groups and other PR nightmares, much less scattered across their video pages like some kind of sponsor. But what’s worse is that these legitimate companies have now inadvertently contributed to the funding of these groups.

Then when you consider the content of the videos uploaded by the extremist groups, things get even worse. The videos contain definitionally explicit material intended to offer widespread encouragement of the harassment and hatred of minority groups.

The video hosting site has rules that forbid any such videos from being uploaded, stating that the site does not “permit hate speech (speech which attacks or demeans a group based on race or ethnic origin, religion, disability, gender, age, veteran status, and sexual orientation/gender identity).”

So how, then, did this content even end up on the site in the first place? Well, it turns out that site can’t exactly immediately enforce many of its terms and conditions. The major online video platform cannot screen the 60 hours of video uploaded each minute; it relies on users to flag any content that is contrary to the sites standards.

That’s putting a lot of trust and responsibility in the hands of users. To rely on viewers to flag objectionable content is to allow for a lot of room for error. In this case, neo-nazi error. NB: Veenome flags objectionable content within 8 minutes of upload often before the video is even ready to play.

Remember, online video makes money because advertisers trust that their material is being effectively and safely delivered to viewers. But what if an online video platform can’t promise that ads won’t be placed next to content that is in direct violation of the site’s policies? The value of the user generated ad ecosystem decreases unless platforms and publishers can create a moderately sensible (not sanitized) content center.  At the very least they need efficient means of abiding by their own rules so that advertisers can trust the borders that are drawn.

To begin with, the newspaper industry has the highest average ad CPM of all online publishers – nearly 3x more than the internet average of $2.52!

On one hand, news websites by the New York Times or the Wall Street Journal can charge advertisers high premia because of their reputations and the higher income demographic of their viewership.  On the other hand, smaller regional publishers are at a loss for similar asset characteristics.

Yet, it would be a mistake to think these local publishers offer only a limited value to online advertisers.

News publishers know this and are using behavioral targeting to capture the full value of their digital viewer base.  Besides the obvious geographical targeting inherent in a regional paper, publishers are offering behavioral targeting for activity in multiple category verticals.

A cursory look at regional news holding companies from the East, Midwest, South and West of the U.S. demonstrated that behavioral targeting enabled news publishers to charge baseline premia of 20%-125% above Run of Network CPM rates.

The variety of pricing structures point to the level of sophistication these traditional publishers have reached in digital advertising.  Flat Rates, such as those charged by the Oklahoman news group OPUBCO Communications, yield the lowest premiums at 27% on average.  2nd degree price discriminators Media One New England and Freedom Florida charge incrementally for filtering out additional behavioral characteristics and begin with a 36% premia for the first layer of targeting.  Publishers like the Dallas Fort Worth Star Telegram (owned by the McClatchy family of papers) charge a la carte for different target categories and have a baseline premium of 125% for behavioral targeting.

Although these figures are unrepresentative unweighted averages and do not account for other factors (e.g. population, circulation, regional incomes, affiliate papers etc.), implementing behavioral targeting is clearly shaping how news media is dealing with digital competition.

According to Jeff Hacket, comScore SVP, “As news evolves towards a more digital model, the issue is not attracting the eyeballs, but rather demonstrating the true value of those eyeballs to advertisers. As advertising rates for digital move closer into line with those of traditional media, the economics of the news business should begin to look a lot more promising.”

Traditional news media may not be out of the competitive woods yet, but by adopting behavioral targeting, it is a great step further toward regaining sustained profitability.

The survey pointed to the increasing prevalence of digital video as well as its growing utility as an advertising medium. The targeting and reach capabilities of digital video are exciting to advertisers, with over 70% of them citing these two factors as their primary concerns. Advertisers are also beginning to shift their advertisements from other mediums, with 64% of advertisers valuing internet video ads more than those on TV.

Another standout year-to-year comparison looked at the advertising industry’s realization of the importance of ad targeting. More and more advertisers are becoming aware of the value of targeted advertising, a trend well depicted by the survey. In fact, the proportion of advertisers who claim that 80-100% of their ads will be behaviorally targeted has grown by over 100% from this year to last.

This new data points to the ad industry’s realization of the power of targeted advertising. In most formats (TV, billboards, radio, etc.), advertisers can only choose the medium in which they will place their ads. After that, it’s more or less up to chance as to who their ads impact. Online video advertising allows advertisers to boil down the display of their ads to a more impactful group with a much higher likelihood of interest and follow through. As you can imagine, this does wonders for the ROI of the advertisements. As a plus, people who aren’t interested in their product don’t see their ads. This saves the uninterested people’s time, and the advertiser’s money.

Standing alone, this year’s survey is promising. However, it becomes even more promising when compared to the results of last year’s survey. Last year, nearly 30% of advertisers claimed to have used online video ads as a “strong minority” of their content. However this year, that number has been slashed to only 12% of advertisers using online video ads so sparingly. The proportion of advertisers claiming “around half” of their content to be online video ads skyrocketed, from 22% last year to 33% this year. What does this tell us? Advertisers have realized that, to an extent, traditional methods of advertising are broken. They are shifting their focus (and money) to the best new medium. In most cases, that new medium is online video.

The main hurdle for the online video industry is to attract more advertisers. Judging by this year’s survey, the industry will be doing just that. However, advertisers still express slight hesitance to outright prostrate themselves to the almighty power of targeted online video advertising due to unclear ROI and success metrics. If the industry can work towards setting a standard for measurement of success, there would likely be a more immediate influx of advertisers.
However, online video advertising will be likely to significantly expand, year by year – as it already has – for years to come.

Ergen has recently come under industry heat for incorporating a feature that allows viewers to skip ads while watching programs via Dish Network. Advertisers are asking, if their ads are being skipped, then what exactly are they paying for? But Ergen defends his move, calling it “competitively necessary.” You can skip ads on online video, right? And you don’t even pay for that service. Then why can’t you skip ads between cuts of Breaking Bad on your TV (for which you pay heftily)? That’s the point Ergen is making. He is the first TV exec to really come out and say it: the pay-TV ecosystem is very much threatened by Web video; TV as we know it is going to have to change.

And Ergen is probably just an early adopter in a trend that will likely gain traction. At the root of the problem is the way that video providers make money: advertising. TV providers charge their users ever-rising monthly fees, then provide them content riddled with advertisements. When was the last time you were really excited by an ad you saw on TV? Every once in a while, you might see, lo and behold, an ad for something you might actually buy. But nine times out of ten, the ads bounce right off your eyes. This is accomplishing nothing but wasting your time and the advertiser’s money. From the advertiser’s perspective, if no one wants to see the ads, then what good is it to show them in the first place? Ergen is calling the industry to action. The TV monetization model can change.

Ultimately, the market only exists due to consumer demand. Eventually, the demands of the users – the viewers – will determine the path the industry takes. Money still needs to be made, and not all advertisements are bad. But some things are going to need some adjusting.

Advertisers? They need to find ways to produce more effectively targeted, compelling, relevant ads.

Video providers? They need to find ways to place ads in a way that is less destructive to their content and more likely to produce a sale.

Viewers? Just keep doing your thing, viewers. We’ll eventually give you what you want.

But how exactly do you target the right audience?

User data collection is today’s dominant method of targeted advertising. YouTube
advertisements target users based on demographic information from their account, their
viewing history, and even their google search history. But this can be perceived as invasive by the user.

According to a recent Pew survey, 68% of web users are uncomfortable with these targeted
advertising strategies. It makes people uneasy to know that their browsing information and
viewing habits are being viewed and analyzed by a third party. People don’t like having their personal data sifted through. But videos? Videos don’t mind.

Instead of mining the user, we ought to mine the video. When a user comes to a page to view a video, the most important thing on the page is the video itself. The users interests are specifically aligned with the content of that video since they have specifically sought that content and are spending long periods of time viewing it. Three things are achieved by doing this kind of content targeting. One, we actually capture the users more immediate interest (the content) as opposed to what they were searching for in their email yesterday. Two, the user feels less invaded and more at ease the advertising that results from this. Three, we are able to more widely target in places where user mining is not possible and not allowed.

And that’s a Yahtzee: win, win, win.

AUDIO: NPR: Attack of the Reply Girls

AUDIO:  YouTube’s Response to NPR’s Story on ”Attach of the Reply Girls”

Just more qualitative data on the expanse of “suggestive” spam in video content that is growing exponentially.

You have probably seen these “suggestive” videos on Youtube sitting randomly in related videos lists for popular videos. They really screw up the ad ecosystem because they are intentionally inserted and infiltrate a subject matter category, leeching away video views from legit content. It’s really hard to combat this kind of spam because the offending videos are merely “suggestive” and have spoofed keywords and categories to match the trending videos.

What do you do if you have 10000 videos getting uploaded every day and 500 of them are cleavage spam? You call Veenome, that’s what you do.

Our own cash money executive Michael Beckner.

This guys’ mind was just blown away. Sponsored by Pepsi.

Reference: Google Project Glass Video

As luck would have it, Kevin Lenane of Veenome, who was recently profiled on InTheCapital, was one of the select few entrepreneurs invited to showcase his stuff and take on some tough questions. As it would appear from the twitter love…Lenane and Veenome killed it:

Kevin and Veenome brought it home taking home 38% of the audience vote (we assume they were voting which platform is the ‘next big thing’). Congrats to Kevin and Veenome!

Event Presenters Below:

Policy Mic – Cofounders Chris Altchek and Jake Horowitz

DC’s own, Veenome – Founder and CEO, Kevin Lenane

Ology – Founder and CEO, Beth Haggerty

ElectNext – Founder and CEO, Kaya Dannenbaum

YouNow – Founder and CEO, Adi Sideman

Via Next Big Thing from The Paley Center for Media on FORA.tv

As an example, lets take a random building in DC. From a single photo, maybe we can tell its three floors and white marble. If we can see the Washington Monument in the background, we can guess that the building is in DC. Based on that information we might be able to ascertain what the actual building is, or at least the neighborhood in DC with some certainty. We then want to record everything we learned about that building such that when a picture gets taken near that building we can use it as reference point. Then we can make assumptions about a photo that may show very little detail since we know many details about the other building in the photo. In this way we can create related detailed graph or map of buildings that we can piece together from lots of detailed points.

The same idea holds true for objects in video. If we can tag an iPad with reasonable certainty in a video then we maybe can assume with some likelihood that the computer that only briefly shows up on the frame 5 seconds later is an Apple brand computer, even though we can’t see an Apple logo anywhere. Because image recognition via computer vision is still not at the point where it can tell us something about everything we give it with no direction, we need to rely on the context to give us more definition from what we can actually glean.

This ability to make relational assumptions amongst the data is what really makes video recognition different than just standard image recognition. We still need computer vision to tell us the initial information but this cohesive look at related data allows to make really powerful assumptions about object patterns that computer vision has never seen before and can’t recognize. In doing this we are sewing the fabric of visual identification from as many data points that we can gather to create a massive map of objects. This is one of the things I love most about Veenome because it allows us to use video as a discovery platform  so that someone can watch videos, and take their own videos, and actually find out more about the stuff that they are watching.  Its going to be really powerful when we can take people beyond search and into discovery realms where they can move organically from the content they are consuming currently to subsequent actions and sources in a fluid way.

I spent about 2.5 months raising a 500k round and did it during off-time and nights and weekends while I had a full time consulting job. It was definitely hard doing it that way, but I needed to fund the business while I was raising. I generally worked 80-100 hour weeks to do this. My schedule would be to typically get up around 430am/5am and work for 3 hours on Veenome. I’d then go to my day job and work solely on that throughout the day from 9am-6pm or so, then I would work again on Veenome from around 6pm-12am. Occasionally, I’d meet investors during my lunch breaks, but they were generally tolerable of my off-hours schedule. About 80% of those 8-9 net hours on Veenome were fundraising efforts from Sept – mid Nov. The remaining 20% were meager product efforts — which essentially meant catching up with my CTO and just making sure I knew where he was taking the product. Without him leading that effort — this would have been almost impossible — but with his help I was able to raise our round in a relatively short 2.5 months.

In those 2.5 months, I raised money down two paths: one here in D.C., and the other through Angellist. Angellist raising has been pretty well-documented, so I won’t go through it in detail, except to say that the founders of Angelist, Nivi and Naval were extremely helpful in giving me feedback on my demo such that it would elicit a better salivation response from investors. I took around 20 introductions through Angelist and wound up raising around 250k through those folks. I made one trip out to the west coast and one to New York. The thing to glean from all this is basically that Angelist provides you with a way of raising money in a non-geocentric way. They really have revolutionized this concept and my hats go off to Nivi and Naval on this one. BUT, you don’t have to raisie non-geocentrically, because D.C. also has a terrific fundraising community.

Yeah, I said it… I think there is a general misconception that raising money in D.C. is somehow impossible and that we, as tech entrepreneurs, need to raise money on the west coast to succeed. I challenge that for those in D.C., particularly if you are at an early stage. D.C. is where your network is, and chances are you have many more angel investors in your network than you realize — you just need to dig and look . Additionally, the lead times, which is the elapsed time between meeting the investor for the first time and receipt of a check, are often quite short. They were all around or less than a month for us.

Some also argue that the company valuations are lower on the east coast than out west, and while I think generally this is probably true, I think those differences are really more indicative of a vast community of more experienced entrepreneurs. The simple fact is, if you’ve run a successful startup in the past your valuation will be much higher because the general risk is lower for the investor. There are just way more people that have worked and run startups in Silicon Valley vs. D.C., and these folks demand higher valuations. It’s not to say that as a first time entrepreneur, I wouldn’t get a slightly higher valuation if I moved out west to raise all my money, but I think at that point the process would be longer because my whole network is here in D.C. This is significant because there is a huge amount of value lost when one or two people in a 4 person company are raising money for 6 months vs. 2 instead of working on the business. This should always play into a calculation of what you are giving up in terms of company equity when you raise money. There are lots of resources around raising money in D.C. so I won’t list them all here, but I found Dingman Center Angels to be particularly helpful. While I haven’t found most angel groups to be super useful, their approach is quite rapid and offers a huge amount of value in terms of their feedback and help on your fundraising materials. More importantly, they connected me with several participating angels.

Another great part about raising money in D.C. are the folks at Cooley. They were instrumental in assisting with the complex documentation and negotiation of terms on the round. I can not recommend them highly enough to budding entrepreneurs as they are low cost and super knowledgable about the tech fundraising process. Involving a legal entity early on in your raise is a really good idea. There are a lot of details around the documentation of a financing, and it’s hard to keep track of everything if you are stretched really thin.

Raising money in D.C. was a really positive and encouraging experience for me and not at all what I had expected. I hope this clarifies the landscape a bit. Obviously, there is a lot of detail left out here so feel free to ping me directly with questions or message me on Twitter at @veeenome.

-Kevin