What's up party people? My name is Sunny Ray. This is Sunny Ray show. My next guest his name is Federico. He's a PhD. We're going to be discussing how brands is rethinking video advertising by embedding branding experiences directly into content. So with that said, I'm going to bring Fed. How's it going, man? Where you calling in from?
Right now I'm in Argentina, usually based in Miami. so it's a pleasure to be here. Thank you.
Yeah, nice to have you here. So I guess take me into the deep end. What Am I saying it right? Brands or how do you say it?
I actually we chose the most difficult possible name for the company. It's a mix of brand bandits. So it's brandits, but without any of the vowels.
Okay.
Brandits, okay. Does it stand for something or no?
No, not really besides mixing those two words together and then the vowels. We just found that the domain was available. So.
Okay. Honest answer, I like it. Hey, what's the what are you guys building? quite fascinating. So maybe go into that side of it.
And so we are building technology that works always with video. Our main focus is video and it's finding opportunities within the video to show advertisements making them look like they belong to the video and without interrupting it. So that is the main value that we deliver. Opportunities to monetize within the video without stopping it.
Cool. Okay. So, let's maybe slow down a little bit and I'd love to you know, I had a bunch of questions I wanted to ask you Here's how you got here. So, your father built a cable company in the middle of the Argentinian Pampas? And what did that I guess business teach you about who actually kind of pays for content?
So, I'm my parents are Italian. I was born and raised in Argentina and I grew up in a farm. My dad was originally a farmer, very successful farmer. And in the mid 90s, he decided to start diversifying his portfolio and small projects started becoming a successful company, a cable company that was mainly aggregating local channels. And the way these local channels monetized was through advertisements coming from local stores and local businesses, too. that was actually going very well. And of course, those channels were monetizing their way, which meant my dad's cable company was also monetizing and growing that way. Unfortunately, a bad crisis came in Argentina in 2001 and the exchange rate went crazy. A lot of people lost their savings and a lot of businesses started closing down. The first thing that gets impacted is the investment that they do in advertising, which meant a lot of those local channels ended up closing and my dad my dad's diversifying went down back to the farms again. So, unfortunately, that company folded, yeah.
Oh, wow. That's what a story. And in the 2001 crisis, the advertising I guess vanished. The local channels closed like you said. So, I guess like what did that kind of chain of failures show you?
Well, it was interesting to see that back then, but even now you see a very similar thing. Local channels don't have access to big advertisers or to big networks. And usually whenever they advertise something, it comes from direct sales. They have someone working for the local channel that goes out and speak to every store and gets creatives. Whatever those creatives are, sometimes they are banners, sometimes they are videos that they can show during breaks. And those are the advertisements that they are going to show in the content. The problem is as you can imagine is very limited. And those channels need to make a significant effort to get those ads to be displayed. There is a missing component here that is available to other forms of media. When you think of newspapers, you see all those banners there on the side. They usually come from programmatic. usually comes from whenever we think of programmatic, we think of Google AdSense. everybody can advertise in Google AdSense. And the beauty of it is that the ads then get adjusted to the people that are consuming that content. So that is what is missing sometimes for these local channels, this connection to programmatic that can help them advertise and monetize.
Really insightful, super interesting. So you were mentioning the So is it Do- Doc?
Do- Doc. was regulated, right? document collaboration and envision Pharma acquired it in 2021. So what did selling teach you about what an enterprise buyer actually values?
Well, that is very interesting because it was a very unrelated business and company if you think of it. In the end, when you look at the core, it was software applied to solving a an enterprise problem. And what we are doing right now with advertisement is software applied to developing an enterprise problem. It's just sometimes a small businesses or small broadcasters or big broadcasters, but they are businesses in the end. And the lesson that we learned and that we are applying every day now with branded is that with Tudog, we needed at some point to make sure that we had all the possible certifications in order to answer questions to pharmaceutical companies with yes, here you have it. Like not let's go back to the workbench and work on that. He's like, yeah, we have all the certifications that prove quality of development and that prove that we can provide service to a company your size and with your vision. And right now it's exactly the same thing. We need to prove every day that we're developing things with quality and following the certifications that can ensure that our services and products adjust to the quality that they want to deliver in their final product, too.
That's.
Super interesting, man. So you I guess I was going to ask you also, Fed, your PhD built models that predicted when an intensive care lab test was worth running. Is placing an ad inside a video the same kind of timing problem?
It has a lot of points in common. Fortunately and unfortunately, I did my PhD before all this hype of AI. I finished my PhD back in 2012. When talking about AI, especially in medicine, back then it was very weird. People didn't think of neural networks as a way of what to do with patients. They didn't trust AI at all. They didn't want to have like a black box telling them what to do with a patient. And it was very interesting because a lot of the findings that we were having were associated to timing and when to do things and when not to do things. And that is exactly what we are doing with video now. And if you go really under the hood, you're going to find that many of those models are similar in the sense of when to do things, why to do them, finding some justifications that you need in order them to explain to broadcasters, "Hey, we showed an ad here because there was a high emotion moment." Or something like that, or because there was a special opportunity there. But it's definitely associated and linked.
That that's really cool. I guess so just to kind of switch gears a little bit, right? So, the insight is that inventory can be created inside video, right? Without interrupting it. Like, when did you know that was technically possible?
It I have to say that it started based the idea of Brandeds didn't focus first on video that is consumed like on demand or live video. We first thought of how can we bring this to video calls? Although the concept was monetizing content coming from broadcasters, we said, "Well, our first step could be video calls." It has a huge population people using video calls all the time. So, how can we use, for example, this white background? How can we show something in our background that can monetize it? So, that was the genesis. Very quickly we realized that the monetization mechanisms for us were going to be very difficult. So, we said, "Well, why don't we go for small broadcasters and then maybe big broadcasters and bringing this as an idea to monetize on demand and live content." But that is how we it was born. And it The main idea was one of two. Either you're saturated with breaks, and you cannot add more breaks to show more ads, because if not you lose engagement with people, so people stop watching your content, or like it happens with small broadcasters, with small companies, they have creatives to show that are not videos, but they have to interrupt the content to show the banner. They don't have videos because videos are usually video ads are usually expensive to produce. So local stores are not going to be able to do that in order to advertise themselves. They just have banners, but they don't have good placements for the banners. So that is how the idea came of saying, "Look, we can generate opportunities within a video, any video, and show for example, in my white background, it would be like a TV screen or a frame ad that contains that creative coming from that local store." So when someone is watching my video, it would be seen that person would be seen that ad there in the background. So that is how it works.
Ooh, I like that. That's super clever. you know, small creators have no resources to sell the sponsors, right? And their video attracts no pre-roll demand. So I guess which of those two problems is actually like the harder one?
They are both really hard. For I think for us, now we are working with both small and large broadcasters. have a lot of demand for pre-rolls and mid-rolls. but the problem is again, think of a an NFL game. I mean, how many times can you pause the content to show a video ad? You get to a limit in which people get tired of that. So even in those situations, solving that problem of maybe you have demand there, but you can't keep interrupting. For small broadcasters, definitely it is the lack of demand. So we are helping them with that, bringing a different type of demand that helps them monetize.
Can you give me branded like in 1 minute? Like what what's the placement? Like how does it get filled? And like who pays whom?
It's a very interesting thing because sometimes we make the mistake of calling publishers our clients, and they are really not because you always of a relationship with a client as that with the flow of money coming from the client to the service or the product provider. In our case it's the opposite because we actually the money is coming from the advertisers and we become a channel for that money to flow to the publishers. We get paid by the advertisers and we pay a share to the publishers. That is the model that we actually use is a rev share. We don't charge anything to the publishers. We provide our value prop is you can monetize better your content without really investing anything. We bring that monetization to you.
And you see that most clients like double their original revenue double against I guess like what baseline and like how fast does it actually happen?
So usually we have a taking a baseline because it depends on the geography ads don't pay the same everywhere in the world. But let's take the US for example. you can expect from a display banner something between 1.5 to 2.5 dollars as a CPM so for every thousand people that see that ad. For a pre-roll you can expect roughly between 15 to 20 dollars. So you can see that there is a scale of 10. But you can in a let's say in a one hour video you can maybe show one pre-roll and one mid-roll. If you pause the video more than that you're going to start losing engagement. We can show a lot more ads because we don't have to pay. So even if we get paid a little less for every ad that is displayed we can show a lot more ads in that unit of time. So when you look at usually the length of the videos you say well if it's monetized this way we can bring the same amount but added so it's incremental revenue coming from these display banners. So that is how it works.
Super interesting. So you guys are pushing hardest on customers over the next I guess 90 days with a date that matters inside that window, right? So what has to be true by then?
Well, so far we've been working with individual publishers and it has been great because it has allowed us to create a portfolio with some clients that are great in terms of number of impressions. So the size of the audience, the quality of the content. We have some premium clients with premium content. But we realized that in order to scale we need to start partnering with one of two verticals. One is the providers of video software like a video player or OTT player. That is the one that we can mount our product on top and use this as a monetization strategy for many publishers at the same time. Or with supply side platforms, SSPs. The platforms that enable the monetization of websites. They do it in some other way. So once again, we would become a technology partner to them to deliver this value to videos. So those are the two things that we are pursuing. And that is why we are trying to scale as many publishers as possible to show the business case and then move to that next station.
Got it. It's super interesting. Okay, that makes a lot of sense. So I guess you want to change how people feel about ads. So if that works, like what does you know video look like in 5 years and like what does AI do to it?
In the end because it's very interesting when you put it that way. In the end, not only we want to help monetize better videos because in order to monetize them better, you need to make the audience feel better with the ads and about the ads. In end, ads are successful when people have a positive association and a recall on those ads. They can remember what they saw and then act on that brand or act on a product associated to that brand. So, in the end we are pursuing that. We are trying to show people that ads support their content, but that ads can be relevant to them, too. So, that is the beauty of it. And we are actually collecting a lot of information about what is going on while people view these and see these ads. And we are seeing very positive indicators and trends. We're actually preparing a business report about what a what we are seeing because I think we might be in front of a new format of advertising that really shows this engagement with brands and with products.
I guess a couple more questions. Like, what makes an in-video ad feel natural? Is it like how you were saying, the framing and like putting like a TV in the back or something? Like, can you talk a little bit more about that?
I think that the best example is when you're watching sports and you see the LED dashboards around the field. So, those are the most common ones because you see a lot of them. Or when you're watching a Formula 1 or MotoGP or something like that and you see those signs on the sides of the track that show brands or I don't know, Louis Vuitton on a bridge around on top of the track. All those things are physical. The problem of physical is that I'm not a consumer of Louis Vuitton. I care for other brands. And those brands are not relevant to me. What if that bridge could have anything that is not physical, that is actually digital, and it changes for every person that is watching that content, that it becomes something relevant to every person. So, that is what we are trying to do, and that is why you have this positive association with it.
Can this work for live video too?
Yes, that's very important. We work with both live and on-demand. And yeah, it's one of our main differentiating factors. The fact of being able to work with live.
Really? Oh, wow. That opens up a lot of opportunity. And what does AI add to the process?
Well, that that's the most tricky part because we see a lot of variability depending on the type of content. It's not the same showing an ad in a situation like right now, like we are indoors and we have walls. So, we have a lot of references to show things in the background compared to a golf tournament that is that outside with trees and you really don't have indications of perspective and all that. But in the end, those are two different problems to solve. We have different models for that. So, the short answer is we have to develop specific models for specific situations. There is no single model that can address everything. And every situation has particular things that that need to be addressed. in the end, we find We always find strategies. We were even testing just This is in some way funny. We did not release anything like that, but we were testing a situation with a surfing tournament. We couldn't find references to show anything because the cameras were focused on the ocean. So, we were like, "What do we do?" So, we started simulating a boat having a banner or a plane flying by with a banner in the back, making it look like it was really flying in the video. we ended up not doing it, but just so you see that depending on the content, you can use different strategies to show ads. Yeah.
Got it. Super cool. Okay, where do people learn more about the company and also you?
I'm sorry. I couldn't hear that question.
Oh, I was saying where do people learn maybe like help me land the plane. where where's where do people learn more about your company and where do they learn more about you? Like are you on LinkedIn or where do you are you writing blogs or where do they find out more?
Actually, we have a presence on LinkedIn. We interact a lot of with our clients and our community through LinkedIn, but we also publish a monthly article about something new that we see not necessarily as a trend but as a need in the market to learn more about. And then we usually publish news too that we collect from different media that are relevant to what we do. So we have a lot of publications in LinkedIn that we aggregate and also on Medium. So those are the three places.
Awesome. So we have a bunch of people listening live, so thank you all for tuning in. Really appreciate it. And also Fed, thank you for your time. Hang out for 1 minute. I'm going to bring this stream to an end and I'll see.
