Blinkx acquires Rhythm NewMedia to scale mobile video
By Chantal Tode
December 5, 2013
There is significant opportunity in mobile video advertising
Looking to tap into the significant growth in mobile video viewing, Internet video platform Blinkx has acquired mobile video advertising firm Rhythm NewMedia for $65 million.
The deal will help Blinkx meet the growing demand from brand advertisers for cross-platform and mobile video advertising campaigns at scale. The news comes at a time when mobile video is undergoing both rapid growth and change as mobile video apps such as Vine, Instagram and others continue to take off.
“[There are] tremendous opportunities in mobile video advertising,” said Mary Pocsik, executive director of media services at agency Geometry Global North America, New York. “Advertising becomes more accountable since interactive capabilities allow for better measurement among many different types of actions.
“Video ads are in general more noticeable ads and invite engagement, unlike mobile display and mobile text,” she said. “In addition, mobile video ads can be more impactful than video ads on a desktop because they take up the whole screen and cannot be easily minimized or withdrawn from.
“Leveraging mobile targeting capabilities, mobile video ads can be modified based on location. Since mobile devices fall under the realm of multi-device marketing, mobile video advertising ads even have the potential to be customized based on different households.”
Ms. Pocsik is not affiliated with Blinkx or Rhythm NewMedia and spoke based on her experience in mobile.
The deal also includes Rhythm NewMedia’s patented mobile technologies, a team with experience in mobile video advertising and relationships with leading brands and media companies. The company has experienced a compound annual growth rate of over 90 percent since 2011, with revenues for 2014 estimated at $25.4 million.
Blinkx, which powers AOL’s video search, connects audiences with brands through generated online content. Rhythm NewMedia operates a similar platform in the mobile space.
According to eMarketer, the U.S. ad spend for mobile video will quadruple from $518 million this year to nearly $2.1 billion in 2016, pointing to the significant potential in this market.
However, mobile video ads will still represent a small portion of the overall spend in mobile, in part because of challenges in delivering these ads at scale, something Blinkx hopes to address.
Robust tracking needed
Other concerns facing mobile video advertising include a lack of robust tracking and targeting capabilities.
Additionally, mobile video campaigns typically cost more per impression or click while not being a primary source of conversions and revenue.
“While 2016’s figure will represent more than one-quarter of all digital video ad spending, it will still be less than 10 percent of all mobile ad spending,” Ms. Pocsik said.
“Advertisers can use a host of vendors to easily start text or display advertising on mobile devices," she said. "Most mobile vendors that have presented to us seldom push mobile video as the main tactic to leverage. Mobile video advertising requires more effort if an advertiser wants to create successful campaigns."
Once the challenges in mobile video advertising are addressed, there is significant opportunity for mobile video formats to target consumers with customized ad experience that provides a significantly enhanced experience over the typical banner ad.
“Our main stance is that the pros justify the cons of mobile video advertising,” Ms. Pocsik said. “As customers continually gravitate towards mobile devices and away from generic ads, mobile video advertising can prove to be a very powerful tactic.”
Chantal Tode is associate editor on Mobile Marketer, New York
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