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blinkx And You Won't Miss It: Video Firm Still Hiring And Acquiring

Earlier this month, online video distributor blinkx bought video ad platform Grab Media, which had been viewed as a Yahoo acquisition target.It was the company’s second ad-related acquisition, following the purchase of Burst Media two years ago.

Suranga Chandratillake, blinkx’s chief strategy officer who co-founded the company in 2004, says both acquisition’s were driven by the need to extend publisher reach.

London/San Francisco-headquarted blinkx distributes ad-supported content, but has planted its flag firmly in video search and discovery for companies such as AOL and IAC’s Ask.com. The company appears to be doing well, with a 73% rise in net income last year to $24 million and revenues of $198 million.

It would seem to have little in common with the other video ad tech companies commanding attention right now – notably Tremor Video and YuMe, both newly public, and Adap.tv, acquired by AOL. Given the difficulty in discerning the differences between those players with an ad network model or a more programmatic/marketplace stance, Chandratillake is happy to stand a little bit apart.

AdExchanger: Why did blinkx buy Grab Media? How is this different than the Burst Media two years ago? What is blinkx’s acquisition strategy?

SA: Over the last two years, blinkx has sought to extend its business model and reach through specifically chosen acquisitions.  Both Grab and Burst brought blinkx access to large networks of new publishers who will now benefit from blinkx’s technology and massive content library.

Collectively, these publishers mean that hundreds of millions of new users the world over will now be able to search for, find, watch and enjoy videos on sites they already visit.  This, in turn, creates a massive new online video audience for advertisers looking for news ways to engage customers in a format that has the brand potential of television with the targeting and measurability of online advertising.

Tremor Media’s IPO, Adap.tv’s acquisition by AOL and YuMe’s recent IPO are new proof points around how hot the online video space is right now and as the space continues to evolve, it’s likely that the larger players will continue to absorb the smaller players.

What’s blinkx’s business model? How do you charge clients?

blinkx is a media company with an advertising business model and advertising pricing.  Whether we price by impression (CPM) or some form of engagement model (CPA, CPC, etc) depends on the advertiser and how they judge success.

We work with publishers, both text and video, advertisers and content producers. Our technology allows us to stitch these three, often-disparate groups together.

Where is the growth in video spend coming from? Are TV budgets shifting substantially?

Historically, advertisers always follow audiences no matter where they are – think back to print vs. online. Doesn’t have to be overnight, but it will happen. They have to be comfortable with the medium, measure it, etc.

Up until very recently, the growth in video ad spend was independent from TV ad spend. Just in the last year we have begun to see a trend of advertisers pulling budget from TV ad spend and putting it into video. Online video advertising is the fastest growing area in ad tech.

Online as an industry is still young –if you look at how different ad formats have morphed over time, in the early 2000s display was hot, then search, which put a dent in print. Then social emerged a couple years ago and it is still big. If you watch how these formats mature, it starts with experimental budgets, then goes to incremental, then to complimentary. Then they start to cannibalize other formats.

Online video – while growing fast – is still in the early stages of experimental to incremental budgets. People are consuming more video online, but there is usually a lag between when consumers move to a new medium and when advertisers follow.

When the “J curve” happens and online video advertising begins to cannibalize traditional advertising, things will be really interesting. We expect that there will be a healthy balance between online and offline media. TV will never go away, it’s a great branding medium.

What is the state of TV/online video convergence? How close/far are we from having advertisers and consumers regard their screens (TV, PC, phone, tablet, etc.) seamlessly as one experience?

While there has been much talk of consumers cutting the television cord in favor of online streaming services, the truth is consumers are increasingly using all services at once. Advertisers are increasingly finding value in advertising with each type of screen.

The real benefit is in being complementary to TV over time.

With online video continuing its rapid rise, how are you keeping up staffing-wise? Where is headcount at blinkx these days?

We’re up on last year with the team being around 300 employees. We have always hired, even through downturns like 2008 – one of the benefits of being in such a fast-growing space.  Right now there’s a focus on engineering talent in San Francisco, CA; Tempe, AZ; Bellevue, WA; as well as Cambridge in the UK, but we will always make space for great people in everything from marketing to sales and administration to finance.