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May - 2009 - issue > Top 10 most promising technology companies
Jivox Video advertising for local businesses
Vimali Swamy
Friday, May 1, 2009
At a time when the world was captivated by television, the Internet changed the scenario with the number of possibilities it offered to people — one of those being advertising, allowing companies to target their potential customers locally and around the globe. But the bigger benefactors of online advertising, until recently had been the large enterprises, who had vast resources at disposal for extensive advertising activities, while smaller business like retail shops or local restaurants struggled to make use of this hot medium.

Observing the plight of small businesses, Diaz Nesamoney founded Jivox in 2007 and introduced industry’s first self-service online video advertising platform for local businesses. “The online advertising space was already crowded, with almost all players focusing on large enterprises. Local businesses needed help in tapping into this new medium, so, setting up a platform for them seemed logical,” says Nesamoney. With an easy to use online service to create high-impact video ads using royalty-free videos, images, music or existing creative assets and then place them on the best local content websites at very affordable prices, the San Mateo headquartered company helps improve the effectiveness of their marketing by reaching local customers through online video advertising.

Transforming Businesses

A survey by the Online Publishers Association found that 80 percent of those who watch online video have seen a video ad at some point, which made 31 percent to visit the advertiser's website and 12 percent to make a purchase. Small businesses traditionally had been advertising in the local newspaper, yellow pages or the radio but Jivox helps these businesses to move beyond banner ads and search advertising by adding online video ads. The Jivox platform provides advertisers with video ad creation tools, targeting technology, reporting capabilities, and a network of publishers.

The features offered by Jivox platform include, ‘AdSlate’, a self-service video creation tool that allows users to produce ads using Jivox’s large library of still images, video clips and music, or by using their own content such as a digital picture of a storefront, product shots, head shots or logos. ‘Targeting and campaign management’ is another feature that enables advertisers to get their ads in front of the right audience using sophisticated algorithms developed by Jivox. ‘Video network’ offers advertisers extensive opportunities to get their targeted message in front of a wider range of audience.

The success stories scripted by Jivox are many, with the turnaround of The Faultline Brewing Company being one of them. Faultline, a restaurant located in the San Francisco bay area, was famous for its beer. Earlier, the restaurant had been using print advertisements to lure the customers but decided to try the Internet to improve its customer base by starting an online reservation system, which produced some good results. But, the success was not replicated with their online advertising that was disappointing.

Faultline signed up with Jivox and used the ‘Adslate’ to create an artistic and visually attractive video ad. The ad showcased a beer being poured very slowly into a frosty pilsner glass. A promotion was also included in the ad that would incorporate the person into a competition, where he had to send an e-mail with the phrase “I Love Beer” and get a chance to win $50 Faultline gift certificate.

The campaign generated instant reactions and ultimately proved to be Faultline’s most successful online endeavor. The attraction of the ad was confirmed by tracking the responses to the promotion. This authenticated the success of the target audience strategy implemented by Jivox. “I was ready to stop investing in online advertising before I found Jivox. The online video ad we placed with them for our ‘I Love Beer’ campaign has generated our highest response to date”, says Christa Shaw, General Manager, The Faultline Brewing Company.

In addition to advertisers that are taking advantage of Jivox’s self-service ad creation, advertisers who already have their own video content are benefiting from its growing distribution network and ad targeting capabilities. Online video ads created with Jivox come with performance-driving interactivity features that give viewers the ability to respond to a video ad on the spot. The Jivox online Publisher Network is a locally focused network of premium publishers that includes hundreds of local TV and radio stations, newspapers, weather and other local content and specialty websites, and offers geographic ad targeting. Circle of Seven Productions, a well-known producer of book trailers, uses Jivox to easily upload and distribute short trailer videos for its clients.

The Jivox business model is primarily ad revenue based on a unique cost-per-view model. The company charges customers only for a fully viewed video, not based on impressions. This revenue model makes Jivox a preferred choice for many small businesses in the U.S. “In our particular market, we are seeing some customers wanting a subscription type model, so they that they don't have to pay a big amount up front, but can instead put it in the marketing budget over time. Letting customers sign up for a specific amount each month gives us a better lifetime value per customer, and the customer can manage its budget better,” Nesamoney clarifies.

The company today has over 3,000 registered customers with a large traction from local businesses like restaurants & pubs, regional hospitals, clinics, spas and large pharma companies.

Strategic Partnerships & Competition

In orders to increase its reach among local businesses, Jivox has licensed its technology to several local and regional online newspapers, radio channels and information portals, and formed strategic partnerships to grow mutually. Jivox expanded partnerships include white label partners like Clearchannel Radio, Examiner.com, Lehman Communications and several other large TV and newspaper publishers. According to Jivox, the addition of these new partners allows it to reach 40 million viewers through its rapidly growing network.

“Though many think that licensing the technology might cause a threat to the company’s business, I on the contrary see this as an opportunity to reach out to the large number of would be customers,” Nesamoney states. The company currently operates with a small team of 40; hence, has no separate sales force to go out on field to acquire new customers. With the local market being extremely segmented, Jivox finds great opportunities in engaging new customers through these strategic partners who have deep penetration locality/region wise. Apart from this, online and offline PR, wide coverage in the press and word of mouth publicity has fuelled Jivox’s popularity among local businesses. Jivox’s services are so easy to describe that people often pass on the information about its services to their friends, claims Nesamoney.

Though most adwork players still target large enterprises, there are a few companies like Spot Runner and TurnHere who have moved in to tap the growing SMB market. Also there are chances of Internet giants like Google, which after the tremendous success of AdWords for online display ads may launch online video ad services. But Nesamoney is not perturbed Jivox apart from its first move advantage also has its strength in its technology. While players like TurnHere play in the same field as that of Jivox, they do not have the flexibility that Jivox offers. From interactive ads to geographic targeting and placing ads for relevant users, searching for existing ads, user analytics, mailing the ads to friends to downloading the ads; Jivox’s services are many. “But the most important of all is none till today allow businesses to create ads for themselves,” he says.

As for giants like Google, Nesamoney believes that large organizations have a diverse business and tend to focus on too many things at once, leading to poor rate of innovation. Jivox continues to focus on the vision with which its was founded and thus has nothing to worry about. “Moreover, the SMB segment currently stands at 12 million and is growing. There is ample space for everyone to play,” he quips.

Opportunities Ahead

The company takes immense pride in the values it stands for. While thriving on passion for work, Jivox also maintains a fun culture, giving ample space for each of the employee to learn and innovate.
Growing at 400 percent quarter over quarter since last year, Jivox is posed to become a gold mine for its investors. It is no wonder that within months of gaining an initial seed fund of $2.7 million from by Opus Capital and individual investors including Nesamoney, Jivox has raised $10.7 million from both Opus Capital and Helion Venture partners.

Over the next one year, the primary goal is to broaden its customer base both in size and in the number of industries it serves. The company has set its eyes on emerging markets like Asia and has sets the plans in motion by expanding its presence in India with centers in Bangalore, Mumbai and New Delhi.

Recent studies show that the online video advertising is poised to grow dramatically. According to New York-based research firm eMarketer, by 2011, spending on online video ads is expected to nearly quadruple to $1.9 billion from $505 million in 2008. The research also shows that more people have started watching online videos, as compared with 114.3 million viewers in 2006. The figure stood at 154.2 million in 2008. This presents opportunities abound for both Jivox and SMBs to make the most of online video advertising in the coming years.

“A leader is one who knows where he wants to go, and gets up, and goes”, this is true in the case of Nesamoney, who has previously founded two successful companies. With all these ventures, Nesamoney has proved that he is definitely a leader, who “gets up and goes.” With Jivox, he hopes to do for Video what Google’s AdWords did for Display.

Diaz Nesamoney: A pioneer of data integration technologies

Diaz Nesamoney has a track record of pioneering a new technology with his every venture. A BITS Pilani postgraduate, he is the founder of Jivox, and has had two prior successful ventures, Informatica and Celequest. He founded Celequest in 2002, raised over $20 million in venture capital, and served as its CEO until early 2007, when Cognos Corporation acquired the company. Celequest introduced the market's first BI appliance, a disruptive innovation that led to its acquisition by Cognos. He was previously co-founder, President and Chief Operating Officer at Informatica (NASDAQ:INFA), which he took from a startup to a publicly traded company in 1999 with a market capitalization of over a billion dollars. Informatica pioneered data integration software as a category and is now the market leader with over $400 million in revenue.

Apart from entrepreneurship, Nesamoney also juggles responsibilities as a trustee of the American India Foundation, a leading international development organization charged with the mission of accelerating social and economic change in India.

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