Irvine’s Specific Media Inc., which raised some $100 million in funding a few years ago, is making a big bet on streaming video commercials.
The online advertising company recently wrapped up the integration of New York-based Broadband Enterprises Inc., a provider of streaming video ads it bought in October for an estimated $55 million in cash and stock.
The acquisition allows Specific Media to offer ads before or after a video clip played online.
“Video is the most effective form of advertising on the Internet today,” said Chris Vanderhook, cofounder and chief operating officer of Specific Media. “Internet advertising is all about targeting and efficiency.”
Specific Media buys banner, video and other online ad space and resells it to companies looking to target specific groups of consumers.
Advertisers pay a premium for the spots because of Specific Media’s “behavioral targeting” technology.
The company can go after people based on demographics, location and websites visited, among other criteria.
Specific Media has been making acquisitions since raising a big round of private equity funding in 2007.
In December, Specific Media bought Amsterdam’s AdCombination BV, a provider of targeted online advertising campaigns and tracking measurements, for undisclosed terms.
The move gave Specific Media customers in the Netherlands, Belgium and Luxembourg.
In 2008, Specific Media bought London’s Adviva Media Ltd. for undisclosed terms.
Sales Spike
Since buying Broadband Enterprises late last year, Specific Media’s sales have been “through the roof,” Vanderhook said.
Specific Media, which doesn’t disclose financials, is set to grow “at more than double the market this year,” Vanderhook said.
Broadband Enterprises is run as a subsidiary and kept its office in New York. Matt Wasserlauf, founder and chief executive of Broadband Enterprises, stayed on as Specific Media’s executive vice president of video platform and services.
The deal making has been taking place amid a shakeout of online video advertising companies in the past year.
In November, New York-based Tremor Media Inc. bought streaming ad placement service ScanScout Inc., while New York’s Undertone Networks Inc. bought online video ad network Jambo Media LLC.
Other online video ad services companies have raised venture funding in recent months, including Denver’s SpotXchange Inc., which raised $12 million in January.
In the past month alone, Redwood City’s YuMe Inc. raised $25 million, Baltimore-based TidalTV Inc. picked up $16 million and San Francisco’s BrightRoll Inc. raised $10 million.
Fast-Growing Niche
Video ads are seen as being the fastest-growing niche of online advertising.
The segment is seen expanding by 40% in the next five years with projections of it becoming a $5 billion yearly market, according to Piper Jaffray & Co.
“It’s a smaller market but it’s growing extremely fast,” Vanderhook said.
Specific Media also works with online publishers to get targeted ads for their sites.
It struck a deal with Palo Alto-based High Gear Media Inc., which runs a collection of auto websites including TheCarConnec tion.com and MotorAuthority.com.
“Automotive is a big advertiser category for us,” Vanderhook said.
Vanderhook and his brothers, Tim and Russell, started Specific Media in the family’s Yorba Linda home.
Tim Vanderhook is chief executive. Russell Vanderhook is senior vice president.
The company has some 120 workers here and more than 400 in all.
