Sgambelluri: Where's the advertising play?

Gerber: The advertising play is actually quite exciting. If you think about television today, it is quite limiting in terms of how it has shaped people's view of what "video" is. We (consumers) think of TV as 30 and 60 minute "shows" that fall into a fairly small number of content genres: news, sports, drama, comedy, etc. Advertising, as a result, has been confined. We've also been constrained to a one way, analog platform for the past 50 years!

The opportunity for Brightcove is to help content owners and marketers broaden consumers' video experiences and make them a much more dynamic, engaging behavior. And yes, I know those are the words of the moment-- dynamic and engaging. But I think we are differentiated from others who talk about these changing needs because we are building a solution grounded on publisher and consumer's control. At the end of the day, that is our mantra. We help publishers build content packages and distribution models based on the value of their content, and consumer demand; and, we are driving development of robust consumer save, share, interact, and re-publish tools that will enhance the control behaviors they have learned from initial web and digital cable experiences.

Why is this important from an advertising perspective? Because as the new media landscape evolves, we believe strongly that advertising will be most valuable when integrated into content that users view as relevant and which they are involved in. The Brightcove advertising play, specifically, will evolve over time as the marketplace matures. There is no way to predict what role we will play years down the road. But I can tell you this: in this initial phase of video expansion to the web and to new digitally connected devices, Brightcove will drive advertising innovation in a number of areas:

• Most importantly, we will be delivering compelling web-based video opportunities to agencies and marketers to drive quality supply in an underserved marketplace.
  
  
• We are building a highly valuable network of content that offers advertisers both breadth in terms of reach, and contextual relevance through vertical channel opportunities.
  
  
• We'll be innovating how sites within the network are packaged, and how they are brought to market. That means everything from the level of control advertisers have in "building" their network, to the types of ad formats and integrations we innovate.

In an unconstrained distribution environment, there are limitless categories of vertical content that can blossom to create a viable marketplace. It's interesting, DVD's (to a degree) have offered a transitional solution to content owners, but packaging, distribution, and retail-related costs often make all but the most mass un-economical. That changes in an internet-driven video distribution world, where scale and efficiency can be driven through a network effect. At the same time, we will be developing solutions that create new communication solutions for marketers. There are a variety of video-based opportunities that make sense for advertisers, which are not financially possible in today's TV economic model.

For example, building a syndication platform that allows marketers to directly distribute video content to partners, affiliates, or the general marketplace. Or, having content-rich marketers serving consumers directly with value-add content. Take a company like Kohler, or Pella windows. Anyone involved with a home renovation would love to access a video library of ideas, instructional content, best practices, etc. Brightcove facilitates easy, syndicated or direct-to-consumer distribution of this content in a way that marketers have never benefited from before.

Sgambelluri: Do you foresee an explosive evolution in advertising (both creative and planning) to leverage internet TV? If so, please describe.

Gerber: I don't necessarily think it will be explosive, but rather incremental and iterative. If there is one characteristic people probably associate me with, its being pessimistic. In fact, I remember a Jupiter conference when I think someone in the audience referred to me as the "angry media guy," because I was questioning many of the industry predictions about the end of TV, and shift of all ad dollars to digital platforms by 2005 (I'm exaggerating just a bit to get my point across).

Bottom line is that the ad business is fairly mature. It's not going to change over night. There are very large businesses dependant on today's structure and workflow. You can't just tear that down-- it has to be reshaped slowly.

I think you are going to see a transition over the next 5-10 years by creative and media agencies to incorporate the flexibility and interactivity of the digital medium into their broad creative development processes and media planning and buying practices. A big part of the challenge will be simply getting organizations to change structurally so that they can accommodate a totally new way of doing business. Clients and agencies need to reshape organizations to support engagement-driven communications. That requires capability, personnel, process, and automation and its not going to be quick or easy. You'll see the "early believers" start doing interesting things this year. Ad evolution will act like a wave: there will be lots of experimentation going on below the surface, and we won't truly see the magnitude of change until the wave gets much closer in to shore.