Entrepreneurial lessons from our portfolio companies Reinventing the video advertising market Why Teads is growing at breakneck speed SHAPING THE FUTURE OF VIDEO ADVERTISING WHERE WE COME IN PORTFOLIO STORY WHY WE INVESTED TRENDS TO WATCH GIMV NEWS Dear, We are pleased to share the fifth edition of Gimv s Insights. In addition to a brief update on Gimv s strategy and portfolio, our goal is to provide you with a number of important business insights that illustrate our investment strategy. Specifically, we take a closer look at the future of video advertising with our portfolio company Teads (formerly Ebuzzing). We hope you enjoy the article. Kind regards from the Gimv team
SHAPING THE FUTURE OF VIDEO ADVERTISING Demand for video is booming Perhaps you have noticed that you are watching a lot more online video this year. Facebook rolled out auto play videos last year and as a result saw a 551% increase in the number of content views, making it the second biggest video site. Leader YouTube says it serves over 6 billion hours of video content each month, up 50% from the previous year. In fact, video increasingly dominates internet IP traffic with Cisco forecasting that video traffic will make up 79% of all consumer Internet traffic in 2018. Unsurprisingly, advertisers have taken note. Online video advertising is growing rapidly. Analytics company ComScore reported that American consumers watched 24.6 billion streamed video ads in 2013, up 148% compared to the previous year, and the Wall Street Journal reported that several major advertisers are moving advertising spend from TV to online video. To meet this growing demand, publishers are scrambling to ramp up their video inventory. The Huffington Post, for example, says it wants to triple its video content so that by next year 50% of its views come from video. However, most publishers will struggle to achieve such goals, because producing video content is challenging and expensive. As it stands today, there is a supply crunch: industry insiders say that most pre roll video advertising inventory for Q4 this year is already sold out, supply is struggling to keep up with demand. That might have been bad news for both publishers and advertisers, but a solution to the problem has recently been brought to market by Gimv portfolio company Teads. In fact, Teads is reinventing the video advertising market in a number of fundamental ways, which is propelling the company forward with remarkable speed.
WHERE WE COME IN Consumer 2020: Investing in companies that understand tomorrow's consumer Gimv's Consumer 2020 investment platform puts the spotlight on tomorrow's consumer. We invest in companies that have a clear and compelling vision of the needs of the future consumer and who translate this into new products and services, novel distribution channels, or entirely new business models. Gimv.com PORTFOLIO STORY Four dimensions of a disruptive business model Pierre Chappaz, Teads Executive Chairman, describes his company as a software company that specialises in digital branding using video. More specifically, and in the terminology of the sector, Teads is a video ad tech company that offers a Supply Side Platform for publishers which allows them to create and monetize brand new video advertising inventory, sitting outside video content. The company s technology has been adopted by the world s leading media, including The Washington Post, Reuters, Forbes and The Financial Times, and major brands such as Samsung, Heineken and AT&T are leveraging this opportunity to roll out their branding campaigns.
Pierre Chappaz Teads Executive Chairman As Pierre explains it, the company is outplaying the competition in four important ways: #1 Outstream video format for premium publishers Advertisers love video because it can be a particularly effective and engaging medium. Its effectiveness is linked to the quality of the video ad itself, but also the context in which it is delivered. The host s brand power is clearly important; a video ad viewed on a premium publisher site such as The Financial Times or The Economist has more clout than a video ad displayed within a low quality environment. The format matters too. Most inventory on the market is socalled 'pre roll' or 'instream' advertising, where viewers are forced to watch the ad before they see the video content they clicked on. Not only does this irritate audiences but most viewers will bypass the ad as soon as they can. To address these limitations and the supply problem that publishers face Teads has developed outstream' video advertising formats for its global network of premium publishers. "Our software creates additional video advertising inventory for publishers because we give them the means to inject video ads within any content on a webpage, including text based articles. In other words, publishers do not need to produce their own video content in order to
house outstream ads." Brands, for their part, now have access to a much larger inventory of high quality video advertising opportunities in prestigious publications. #2 [Better] monetizing advertising inventory In addition to creating advertising inventory, Teads also helps publishers better monetize their inventory. Teads offers its specialised sales force services to interested publishers, it can also help publishers create a private marketplace so that they can benefit from real time bidding (RTB) while maintaining control over their inventory and prices. Publishers can also join the Teads exchange or easily plug into the programmatic ecosystem of third party trading desks and ad networks. #3 Audience friendly advertising format Pierre explains: "We are opposed to advertising that forces itself on the audience. We strive to create positive experiences. That is why all the advertising we serve is based on voluntary action." The Teads inread format (video in the body of an article, watch The Washington Post example) illustrates this point well. When scrolling through an article, the video ad will start playing without sound once it is fully visible on the screen. To activate the audio the
reader needs to roll the mouse over the video. The sound switches off when the mouse is moved away and the video completely disappears when it has been viewed to the end. #4 The viewability problem solved Advertisers rightly expect that their advertising is 'viewable'. It may sound obvious but the reality is that a growing proportion of purchased internet ads are in fact not seen. In their June 2013 study, ComScore estimated that 54% of all ads were never seen, a jump up from 31% in 2012. This is a huge concern in the industry and if not solved will erode trust and hobble investment. Teads tackles this problem through its business model advertisers only pay for user initiated completed views and through technical innovations like the View to Play concept, which ensures that a video only plays if it is viewable by the user. "To date there had not been enough quality inventory for distributing video. Teads has changed that." Pierre Chapaz Executive Chairman Teads Raising the bar The above four strengths have made Teads a disruptive contender in the market. Pierre explains: "To date there had not been enough quality inventory for distributing video. Teads has changed that. We have opened a huge inventory. Moreover, it is high quality inventory. We have relationships with premium publishers such as Reuters, The Telegraph, O Globo, El Economista and Nikkei, our format is respectful of a user's browsing experience, and we guarantee viewability. Most of our competitors are still focused on lower margin pre roll inventory; they will have to reinvent themselves." Managing growth Teads took a major step forward this year following the merger with Ebuzzing. The combined group now has more than 300 employees and is active on three continents. And growth continues to accelerate. According to Pierre, the
company's year on year growth rate is approximately 50% this year and will accelerate next year. Looking ahead, Teads will stick to its core video business and focus on international expansion. Pierre: "We launched very successfully in the U.S. last year. We also opened offices in Latin America and are currently starting activities in Korea, Japan, and other regions in Asia. Today we're active in 18 countries with 25 offices; by next year we hope to complete our global expansion." Focus on your team So what were the critical success drivers for Teads? They understood where the market was going with video, and crucially, they both spotted and capitalised on opportunities to outclass the competition. But for Pierre Chappaz, that is all beside the point. The most important success factor is the team, the founders obviously but also the people we managed to attract. As founders we had a degree of credibility in the market thanks to the success of earlier ventures and that really helped attract some outstanding people. That is crucially important because with the right people you can respond to challenges and opportunities quickly, and most importantly, you can execute well. For example, the outstream format is a nice idea, but we could only succeed if we implemented it well. Execution is everything. Video Why Teads is growing at breackneck speed
WHY WE INVESTED Why Gimv invested In 2011, Gimv spearheaded the second financing round of Ebuzzing, the company that later merged with Teads and rebranded itself Teads. At the time, Ebuzzing was a rapidly growing specialist in social marketing and had carried out several acquisitions in the area. Gimv partner Geoffroy Dubus explains: "We were particularly impressed with Ebuzzing's management team and its execution capabilities in monetizing social media. Social advertising was still nascent at the time and mainly done through viral video formats. It was clear that video would be the company's growth engine. Also instrumental to the company's success is the way it has acquired and built up a network of high quality premium publishers and technologies, which reduces its reliance on the Google advertising ecosystem." The investment strengthened Ebuzzing's financial capabilities, allowed it to make key acquisitions and helped speed up its growth in Europe and beyond. Since the investment in 2011, the company has grown 7 fold.
TRENDS TO WATCH Trends to watch We live and work in a rapidly changing world and market economy. As Gimv's mission is to help build companies that are working on tomorrow's solutions, we need to have a finger on the pulse in the market. Every month we spot a number of innovations, we like to share some of these trends in each edition of Gimv Insights. Continued urbanization is shaping trends in consumer goods and housing markets Urbanization continues unabated with 52.7% of the world's population now living in urban areas. According to market researcher Euromonitor this is driving demand for apartments and space saving consumer goods. Source: http://blog.euromonitor.com/ Webrooming more popular than showrooming Studies show that 'webrooming' (where shoppers do their research online before buying in physical stores) is actually more popular than 'showrooming' (where shoppers try out products in physical stores before buying online). That's good news for physical retail stores, but it does highlight the importance of a solid digital strategy. Source: http://www.wired.com/
GIMV NEWS Gimv News 24 10 2014 Gimv backs growth of plasma nano coating technology provider Europlasma 21 10 2014 Marc Descheemaecker co opted as a member of the board of directors at Gimv 01 10 2014 Naxicap Partners takes control of Trustteam Portfolio Company News 04 11 2014 City of Baltimore selects Itineris UMAX CIS solution 03 11 2014 GreenPeak wins Deloitte Fast50 technology award 01 10 2014 Eurocept buys Medizorg 26 09 2014 New GreenWatt installation inaugurated in "les Landes" (FR) 19 09 2014 PE International secures EUR 10 Million from the venture capital unit of Siemens and Gimv to fuel continued growth 10 09 2014 McPhy Energy admitted to the CAC mid & small index Gimv 2014 / Privacy