BlackArrow Inc. has emerged with a new round of funding and a targeted, multi-platform advertising management system for operator-delivered video-on-demand (VOD) services, digital video recorders (DVRs), and video that's piped over the public Internet. (See BlackArrow Bows Video Ad System.)

BlackArrow, founded in early 2005, scored a $12 million B series of funding led by Cisco Systems Inc. (Nasdaq: CSCO), Comcast Interactive Capital , Intel Corp. (Nasdaq: INTC), Mayfield , and Polaris Venture Partners . The company, which operates offices in New York and San Mateo and has north of 35 employees, has raised roughly $17 million.

The company's new president and CEO Dean Denhart says BlackArrow is going after three specific customer groups: cable operators, content owners and studios, and advertising agencies.

Although systems that manage and deliver targeted ads for the DVR and Internet-delivered video is in BlackArrow's product portfolio, the company plans to focus initially on cable VOD, and enable operators to splice in ads on the fly.

"VOD with dynamic ad management is a necessary first step to [deliver targeted ads] on the time-shifted side," Denhart says.

The company claims that non-disclosure agreements prevent it from saying anything about its trial and deployment activities, but Denhart estimates that the company will enter "viable field trials" with cable operators by mid-to-late second quarter next year.

While going after the cable sector won't result in an immediate spike in revenue, "the payoff [with that strategy], we think is significant in the long-term," Denhart predicts.

Denhart says BlackArrow's business model does not call on the company to take a cut of the advertising revenue. Instead, it uses a transaction-based system that charges an undisclosed amount for each ad that is served.

In addition to a Web-based ad campaign management system, BlackArrow also supplies an ad decision system that sits at the edge of the cable network, and integrates with the operator's VOD system.

In June, BlackArrow announced it had integrated its ad campaign server with the RGB Networks Inc. Broadcast Network Processor (BNP). BlackArrow has also conducted demos with BigBand Networks Inc. (Nasdaq: BBND) and Cisco, which bought video server startup Arroyo Video Solutions last year for $92 million. (See Cisco Snatches VOD Vendor Arroyo.)

The company is also keeping close tabs on DVS 629, an evolving Society of Cable Telecommunications Engineers (SCTE) standard that will result in an application program interface (API) for a targeted advertising systems interface.

Typically, ads are baked into the VOD program/file days or weeks ahead of time, making it difficult for operators and their advertisers to swap them out in a timely fashion and keep those spots relevant and "fresh." Charter Communications Inc. became one of the first to try out dynamic VOD ad insertion when it launched a trial last year in its St. Louis system. (See Charter Tests Dynamic VOD Ads.)

BlackArrow is also emerging just as the North American cable industry moves ahead on some serious work linked to "Canoe," the code-name for an advanced advertising applications and services project. It's said that as many as 60 vendors replied late last month to a request for information (RFI) from CableLabs that's expected to lead to a common set of interfaces and systems for advanced forms of advertising, including targeted video spots. (See Cable's 'Canoe' RFI Paddles Toward Deadline.)

With that many vendors vying for cable's next-gen ad business, BlackArrow is also certain to face some stiff competition from the likes of Invidi Technologies, Visible World , and aQuantive Inc. (Nasdaq: AQNT), which Microsoft Corp. (Nasdaq: MSFT) acquired this summer in a deal valued at $6 billion. (See Microsoft to Buy aQuantive.)

— Jeff Baumgartner, Site Editor, Cable Digital News