Scott Ferber’s Videology Is Building The Platform for Converged TV and Digital Video
Energy, enthusiasm and perseverance are standard personality trait requirements for those building businesses. But if sheer exuberance were the sole criteria for being a successful entrepreneur, Scott Ferber, would be at the top of the list. Add to this a penchant for math-based problem solving and a knack for timing the market, and it’s evident Scott has what it takes to be world-class business builder, having created online ad network company Advertising.com, along with his brother John, in 1998, which he then sold to AOL for $435 million in 2004. Now he’s well on his way to building a platform for the next big wave in TV and digital advertising—converging the two with his next venture–Videology.
Scott Ferber, Founder and CEO, Videology
“Videology is one of the world’s largest video advertising platforms. By simplifying big data, we empower marketers and media companies to make smarter advertising decisions to fully harness the value of their audience across screens. Our math and science-based technology enables our customers to manage, measure and optimize digital video and TV advertising to achieve the best results in the converging media landscape,” says Ferber.
Video advertising on traditional, linear TV platforms is already big business—nearly $70 billion in the U.S. alone. Digital video is the hottest and fastest growing segment of online advertising, growing 40 percent this year to nearly $6 billion, according to eMarketer. Now the convergence of TV, desktop, mobile and tablet video is a growing and tantalizing opportunity for marketers looking for both reach in a fragmented media landscape and the efficiency that comes with digital targeting capabilities at scale. Given the enormous size of the market, Videology has been able to attract $130 million in VC funding from Catalyst Investors, New Enterprise Associates, Valhalla Partners, Comcast Ventures and Pinnacle Ventures.
Scott came up with the idea for Videology in 2006 when he was working for AOL Time Warner after the buy-out of Advertising.com. He saw what CEO Jeff Bewkes was working on to create content platforms like the “Sex in the City” and “Sopranos” franchises to enable multiple revenue streams from both cable subscriptions and premium content. According to Ferber, Bewkes was talking to his management team about his concern over the potential for a future where premium content would be distributed on the Web and what that might do to its subscription business model in a world where no one paid for content online at the time. “I was the Internet guy. They brought me in, and said, ‘Okay. What’s the future?’ We know access is great. We’re not asking about access business. We’re asking about advertising,” says Ferber.
According to Ferber, “If you look at the TV advertising business, eight to ten percent of what’s spent on TV is what they really want in terms of reaching the exact target audience. Ninety percent is wasted. Those misdirected dollars represent a hell of a lot of money. The simple concept was don’t let what happened to your music business happen to your TV business. How do you avoid it? You become iTunes. You already have the content and the distribution platform (AOL Time Warner hadn’t spun off Time Warner Cable yet). We already have 50 percent broadband penetration in the U.S. for consumption on the internet. We’re there. It’s a tipping point. Bewkes decided that’s what we would do and even coined the term ‘TV Everywhere’ to describe it. I then went out to actually create that capability,” says Ferber.
Ferber set out to build the equivalent of a TV everywhere user experience. His team licensed content and created a TV experience on your computer. They had the whole model laid out and even built the platform to do it but they still couldn’t get it off the ground. According to Ferber, “It’s amazing what we did. Media companies, TV companies and major agencies and marketers told us that we were onto something big. But, unfortunately, something big with no revenue was still a goose egg.”
The chief sticking point in getting the business model off the ground was that the existing legacy systems didn’t have the infrastructure needed to deploy addressable television. Ferber couldn’t get the old, antiquated system of copper wires and co-ax cable and fiber to work. According to Ferber, “The first thing I asked myself was ‘can I take TV content and put it on the internet’? Then we could leverage internet attributes—such as real time, ubiquitous access, its address-ability and all its other marketing advantages – to make it potentially more valuable for the marketer. We’ll recreate the TV experience here on the unwired network. We took the concept of addressable and advanced television and applied it directly to PC, mobile and other connected devices. Collectively that was the Holy Grail,” says Ferber.
The initial business model didn’t work out, but the technology that Videology developed was still valuable. Marketers know that they have consumers watching content across multiple devices. They want to know how to reach them where they are, when they are there and on whatever screen they’re on in a way that’s not only effective but also non-invasive. Videology provides a solution. So the business took off. ”From 2009 until now, it’s just been a rocket,” says Ferber.
While there are some similarities between the two companies Scott founded, in terms of solving problems for marketers, Advertising.com was about yield management for direct response advertisers. Videology is about deal management for branded video advertising. Advertising.com was an advertising network. Videology licenses its software so other companies can create their own video networks. “If you look back at 1998, how many people knew digital? Only a handful. Advertising.com solved a problem for direct marketers. The industry today is pretty sophisticated and people want to have control and transparency. They want to license the technology. We’re all about ad management. The idea is you give them the platform to do it themselves,” says Ferber.
Scott grew up in suburban Baltimore. While he was always interested in and proficient in math, he got his first taste of what it takes to start and run in business in college at the University of Virginia. “I know it sounds crazy, but I had my own car washing business when I was a freshman in college. There was a recession and in 1987 there were no jobs unless it was bussing tables. I had straight As. I was a great student. I had recommendations. I wasn’t a slacker. I was at the top of class. What do you do if you want to make something happen? You get entrepreneurial. Three other friends and I leveraged our relationships in the community to get a car washing business going. It was called the Quality Carwash Company. I’m very literal with my naming–Advertising.com, Videology. Necessity was the mother of invention and it just built confidence, even though it was just the first step,” says Ferber.
From his car wash business experience he moved on to an engineering internship at P&G. “When I was in academia, I found myself interested in group project work where we would create something to solve a new problem. Being an entrepreneur is problem solving. I like math problems and, to me, entrepreneurship is a big math problem. P&G had great management training and they needed people who can solve math problems and engineering problems. They put me into a physical manufacturing plant and made me responsible for the production. It was a real get your hands dirty job and that’s why I took it,” said Ferber.
From there Scott moved on to Capital One (Signet Bank at the time). “I was recruiting for Procter and Gamble at the University of Virginia, and my old professor told me about these management consultants who were revolutionizing the way you look at information as it applies to direct marketing. Talk about another cool math problem. I never knew that could be so interesting and, lo and behold, I ended up going there, created a bank card, got spun off a year later to become Capital One Financial Corp launching new businesses. I was what they call an ‘intrapreneur’,” continues Ferber.
Scott did that for three and a half years. “I was an entrepreneur on someone else’s pay with someone else’s bank. I had to go raise the money. I had to go to the board and ask for $1 million. I had to do all the stuff I do as an entrepreneur. I just did it at the company level with the board and the people I was reporting to as opposed to now. To finally do it on my own was just a natural next step. I literally took progressively more risks as my career went on,” says Ferber.
Today the Baltimore-area based Videology has 315 employees with offices in 15 countries and has been growing, on average, over 100 percent a year for several years. The whole ad tech space is white hot and frothy, and perhaps on the verge of a bubble and the pressure of sitting on $130 million in VC funding, one would think Videology is readying itself for an imminent IPO. But according to Ferber, there is nothing planned on the horizon.
“I’m here to build a long term, sustainable company. Along the way, there will be opportunities to create liquidity for our investors. What we’re trying to do is apply math to the convergence of TV and the Internet. There’s a $200 billion global television industry and if the average national advertiser is wasting 90 percent of its ad spend and it’s still the greatest medium for them to advertise, there’s a huge upside yet to play out,” concludes Ferber.