ScanScout Targets Online Video

Startup ScanScout Inc. , which aims to help video providers target advertising at end users, received $7 million in Series A funding yesterday.

The round was led by General Catalyst Partners and included participation from prior angel investors. Those investors include Georges Harik, who developed the technology behind Google (Nasdaq: GOOG) AdSense; Ron Conway, who was an early investor in Google; and First Round Capital. (See ScanScout Gets $7M.)

The funding will be used to add product staff, tech staff, and sales staff, says ScanScout CEO Doug MacFarland.

With the online video market rapidly expanding, advertisers are looking for ways to reach the growing number of end users tuning in to digital video content, user-generated or otherwise.

In a bid to make money off of this opportunity, startups like ScanScout, AdMob Inc. , and YuMe Networks are promising new ways to deliver ads based on the content of the videos being viewed. (See Internet Video & Ads Cautiously Mix, Online Video Pitches for Riches, and Online Video: Show Us the Money.)

Like its competitors, Cambridge, Mass.-based ScanScout's technology monitors videos for tags and metadata, but it also analyzes text, audio, and color patterns within the video to determine which ads would be best served with it.

Publishers use a bit of ScanScout code to put a small banner, showing varying ads, below the video being shown. When an end user clicks on an ad, the video is frozen and a new browser window opens to take the user to a designated site. Advertisers only pay for ads that are clicked on by the end user.

"The traditional ad model connects publishers and advertisers without connecting the end user," MacFarland says. "What we're doing is connecting the end user and the advertiser."

Just as importantly, MacFarland says, ScanScout's technology helps protect advertisers from having their ads associated with content they find inappropriate. A company that may have shied away from displaying ads on sites that contain user-generated content in the past can protect its brand image by knowing that its ads won't be served adjacent to videos that are violent or discriminatory, for instance.

The company's product became commercially available a few weeks ago, and MacFarland says ScanScout already has advertising commitments from national agencies and brands, though he wouldn't disclose any names.

— Ryan Lawler, Reporter, Light Reading

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