ADOTAS EXCLUSIVE - Online video is an important and innovative tool that advertisers and marketers are still learning how to utilize effectively. But with no current ad delivery standards set across all media players, advertisers are having trouble capitalizing on this technology. Panache is a company that is looking toward the future of online video and hopes to be an integral part of its evolution - Adotas sat down with the president and co-founder of Panache, Steve Robinson, to discuss how he plans to help Panache stay ahead of the curve.

ADOTAS: Hi Steve. Thanks for giving us the opportunity to catch up with you. Can you give us some background on yourself and your role with Panache?

STEVE ROBINSON: Thanks for chatting with me. I am the president and co-founder of Panache. I do many of the typical things presidents of start-ups do, which is guide strategy and operations, and helping wherever I can in order to empower the team to succeed. Prior to Panache, I was involved in building delivery systems for “over-the-top” ad delivery in television. We developed an ad delivery platform which delivered advertising that was separate (detached) from the encoded television video and then “triggered” the advertising to appear at the right time in the video. Before this, I founded Panache’s parent company Panther Software, where we developed high-performance data exchange software for Fortune 500 companies.

ADOTAS: Explain to our readers the role Panache has in the online video market and what they’re doing to change the way advertisers use video content.

ROBINSON: Everyone knows video content on the Web is expanding. Perhaps it will replace television one day, but at a minimum we know for sure that the Web is quickly catching up. The challenge that advertisers now face is how advertising works in our new digital world.
Both television and broadband are affected. TV is faced with the penetration of DVR technology. And online, advertisers are forced to navigate through stale formats and disparate technologies while vying to attract all of those eyeballs out there on the Web to engage more with interactive content.
Panache’s goal is to make this complicated world of monetizing digital video with advertising much easier. We provide publishers with a platform to deliver any ad format into any video from any ad server. By helping publishers maximize the value of their content, we in essence are helping them reach and engage with their consumers more successfully. Publishers are our partners, and we work with media buying agencies too. Panache helps publishers succeed and publishers help advertisers succeed. Hence Panache helps advertisers succeed.

ADOTAS: How does your business model work?

ROBINSON: Panache’s business is an Application Service Provider (ASP) model. We deliver ad formats into video. All ad formats, all types of video players. Panache’s platform provides a suite of technologies including the ability to visually overlay ad and content enhancement experiences on digital video, and an ad framework for building IAB ad units or custom ad units, and then target many delivery points and player technologies. Panache gives away all this technology and ensures the ads get to the video distribution point. For that we charge a fee.

ADOTAS: Currently, there are no ad delivery standards set across all video players. How does Panache address this? Is there anything the company is doing to change this?

ROBINSON: You are right. In fact, not only is each video player custom-built, but new players are coming out every day, further complicating the market. Every publisher builds their own player because companies like Adobe and Microsoft supply the “tools”. Panache supplies “instant-on” advertising capabilities into any player, no matter how custom, to trump the limitations and complexities posed by so many custom built video players and the abundance software players (i.e., AMP). It’s complex, we make it all simple.
Developing ad delivery standards is going to be hard, really hard. The problem is not developing the actual standards themselves but rather that, technically speaking, there is so much you can do with digital video, there are great creative tools for creating rich media, and so many bright talented people developing interactive ad formats that standards almost seem limiting. While the public is starting to see standard ad formats from the Interactive Advertising Bureau (IAB), we also see publishers wanting to be more dynamic in how they brand content, move forward and backward in video to brand and find new ways to showcase their products. The advent of new tools from companies such as Adobe and Microsoft are unlocking a world of creativity. We’re also partnering with the Rich Media format companies to make it easy for their publishers to monetize video. Again, big picture - it’s complex, we make it simple.

ADOTAS: What is significant about this partnership with Adobe? What does it mean to Panache and to video advertising?

ROBINSON: Great question. The obvious benefit is that we have a great niche in Adobe Media Player (AMP), and a fantastic partner in Adobe. AMP is doing great, with their product flying off the shelf (or should I say servers). We view the relationship as a big win for Panache and a great addition for Adobe. AMP has a scripting language called AMOD, but without getting too technical only a couple basic ad types work, it’s manual, and next to impossible to control sequentially placing ad overlays and positioning. With Panache, publishers can add any ad format, at any time in the video, within any area of the video screen creating unlimited content enhancements and advertising possibilities all visually (no coding) so we’re really helping publishers and Adobe get a big win.

Publishers recognize their best content is going to be distributed beyond their html players and they have to monetize everywhere their video plays. Publishers can no longer say, “Well we just put our video on our portal site, that’s it.” To reach consumers, publishers have to distribute to multiple places and get their ads into any and every player. Owning the last mile, so to speak, is critical. That’s Panache and that’s our win.

ADOTAS: How did the conversation for this partnership come about? Who approached whom and what was the motivation for it?

ROBINSON: While everyone is aware of the quality of Adobe’s products, it is really their people that make the company strong. The more time we spend with them, the more personal the relationship becomes.

As we started showing the Panache platform for publishers some time ago, we were introduced to a couple of the early AMP visionaries. We explained what we were doing and conducted a few demos and they loved it. Adobe knows the problem we solve well as they live in the flash authoring and video world, and they know this problem transcends all publishers and player consumption points. We started talking about AMP, long before the right solution was developed. But we saw an opportunity, jumped on board,and made it one of our key initiatives. We clicked with everyone at Adobe right at the start and it’s a real blast.

ADOTAS: What has been the most controversial aspect of the monetization of online video?

ROBINSON: Well, there are a few controversial aspects. Depending upon who you talk to, you’ll get different viewpoints. One key issue is how brands can be associated with user-generated content (UGC). But this has been debated fairly extensively, so let’s address some others.

One key question is how publishers are going to make money in online monetization. We know bandwidth and streaming costs will come down for both publishers and consumers. It is clear that consumers are going to the Web for entertainment they previously watched on traditional television. And water cooler talk is now about guessing what percentage of television consumption will be in “new” TV (internet distributed). But we’re also hearing a lot of talk focused on how to make money. Making money means efficiency and efficiency means the ability to scale. Television and HTML ad buys scale. They scale because technology is behind the scenes, and is never an issue.

In online video advertising with all these player technologies and different implementations by major publishers and multiple distribution points, how are media buys going to scale? Until buys can scale, there won’t be efficiencies. Until there are efficiencies, media buyers won’t be there. And, until media buyers are there, publishers won’t make money. But consumers are there, so a solution is desperately needed.

ADOTAS: In your experience, what are the most common missteps companies take in using the online video medium?

ROBINSON: I wouldn’t really call them “missteps,” they should be looked at more as what are the “next steps” to take and how is my business going to be impacted in three or five or 10 years from now. It took many years from the time cable television first started laying cable to becoming the powerhouse they are today. But the leaders in that industry 30 years ago had great vision and execution of where they wanted to be in 10 years, and most important, how to get there.

At Panache, we are working with some world class publishers, both smaller companies and traditional programmers. We haven’t seen anyone making any missteps with regard to strategy. That said, there is going to be a lot of learning from the first steps, and I think programmers are now ready to start taking their “second steps.” I’m also a believer that companies (both major publishers and newer companies like Panache) need to try a few steps to get it right. I can’t go into the steps we are taking, but I will say our focus is on what we think the publishers’ and advertisers’ third and fourth steps will require in terms of ad platforms.

ADOTAS: What else does Panache hope to do to make an impact on online video advertising?

ROBINSON: Well, we just finished outlining key initiatives for our next feature release and the focus of our business is enablement - who we are enabling and why we want to focus on enabling these constituencies. We look at the market and keep coming back to who will be the major players in say 2012 and how we position and focus now to be the platform for these groups. While I can’t share details, I will say that we’re very confident in our understanding of how the business will unfold that we have the right focus in terms of customers, partners and product benefits for our customers and the larger ecosystem.

ADOTAS: What do you believe is the key to staying viable and yet agnostic when it comes to forms of advertising?

ROBINSON: Early on in this business it seemed that many groups were focused on supplying in-video advertising for Web video. But many brands weren’t and still aren’t there yet. The majority of streams are UGC content, which has its own set of challenges when it comes to monetization. So, companies with forms of advertising are still figuring out how to sell.

Our purpose for being agnostic is the recognition of two factors: the reality that there is going to continue to be many ad formats, and the ability to accept any media buy as the key to scaling efforts and motivating the buy-side to more quickly move to Internet video. As Panache stays focused with regard to our business, our belief is that you are either an ad network or an enabling company. This is how aspects of the last Internet growth played out and how the TV market developed. Panache is an enabling company and our platform enables publishers to monetize their video connecting any player to any ad format from any ad server. And we work with many ad networks and format companies as well, providing them with “enablement.”

ADOTAS reached out to a few of Panache’s clients to gauge their experience with the company. Here’s what they said:

The CEO of Twistage, David Wadler stated, “In the online video space, monetization capabilities have grown significantly in importance - even in the past few months. When we learned about what Panache was doing, we were extremely excited to integrate it into our white-label video offering. What’s really great about it is that it allows publishers who are adding video to the mix to leverage their existing ad serving capabilities, reducing training and new infrastructure investment and increasing ROI. This was very much in keeping with the Twistage model, and once we integrated, created a very compelling story for our customers. Above and beyond the practical benefits of using Panache, the “eye candy’ aspect of their ad delivery system is a critical differentiator. Content providers can now design ad experiences in an almost cinematic way and in so doing, really ratchet up the level of user engagement with the brand.”
“We have been working with Panache for approximately 18 months. We met Panache’s CEO Steve Robinson at an event about two years ago and quickly realized that Panache’s dynamic and flexible ad delivery platform was just what we needed to successfully monetize videos played on Break.com. When it comes to monetizing Web video, there are really only three ways to sell advertising. The first way is to put ads around the video (which is probably the least sustainable model), the second is to insert pre-roll advertising (which users hate) and the third and most effective way to monetize video in our minds is in-video advertising, where interactive and non-intrusive advertisements actually appear inside the player,” said Nick Wilson, CTO of Breakmedia.

“Panache provides a very important technology platform that enables the easy delivery of interactive and innovative ads into video and allows us to schedule these ads to appear when and where we want throughout our Website, all without having to encode advertising into the player. This permits our ad sales and development teams to stay focused on creating relevant and innovative ad campaigns that, thanks to Panache, can be changed on the fly to fit our clients’ needs without us having to dedicate expensive engineering resources.”

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