Extreme Reach Tries Video Ad Distribution Once More, With the Cloud
It’s not often in the startup world that you get to build the same company twice, with better technology the second time around. But that’s the basic story behind Extreme Reach, a Needham, MA, company that launched this January with a vision of helping video advertisers and their agencies distribute their ads to cable networks, TV stations, and Web publishers.
The principals at Extreme Reach—CEO John Roland, chief operating officer Tim Conley, chief technology officer Dan Brackett, and vice president of sales Patrick Hanavan—all worked together at FastChannel Network for seven years, until they sold the company to Irving, TX-based DG Systems in 2006. FastChannel helped to pioneer the digital video advertising distribution business, and made $30 million a year at it, Roland told me last week. But at the time, the task required 200 employees, a $15 million centralized data center, and dedicated video servers at 1,200 cable and TV stations across the country.
Extreme Reach, by contrast, has 17 employees and no data center—it stores and serves video ads using cloud-based storage and processing at Amazon and Nirvanix. The startup’s 10,000 clients don’t need any specialized hardware, either.
Roland says when he and his group of fellow FastChannel alums saw what was becoming possible thanks to cloud computing technology and declining bandwidth costs, they couldn’t resist the temptation to build FastChannel over again—but to “completely change the model of how we do it.” They knew they’d be up against their old company, which is now known as DG FastChannel, but Roland says they felt they’d have the advantage, since DG now relies on a satellite-based distribution system and dedicated hardware.
Extreme Reach’s cloud strategy puts it “two generations ahead” technologically, Roland says. Thanks to Amazon and Nirvanix, “I’m able to expand to massive amounts of bandwidth and storage whenever the business demands, and if I don’t have the volume I can go down—so I don’t have any cap-ex [capital expenditure] requirements,” he boasts. “It’s a 100 percent software model, and I can do it for about 20 percent of the cost of three or four years ago. I can even scale to the degree. It’s an interesting time we’re living through.”
Extreme Reach has been growing speedily, attracting at least three funding rounds this year from investors Greycroft Partners, Village Ventures, and Long River Ventures. The company said at the time of its launch in January that it had collected a $1.5 million Series A round in January. Two more funding rounds, of unspecified amounts, followed in March and July. Roland says the company has raised $6 million altogether in the last year. While the company doesn’t need as many employees as FastChannel had to succeed, Roland says the plan is to use the money to expand the staff to at least 50 over the next six to 12 months.
Extreme Reach’s central tenet is that companies who advertise through video need help getting that video to all the places it needs to go—which, in an era of media fragmentation, can mean not just hundreds of cable networks and TV stations, but thousands of independent websites. (Web video advertising is only a $1 billion business so far, compared to TV’s $60 billion, but it’s “growing at a good clip,” Roland says.)
Luckily, it’s often the same video footage that needs to go all of these endpoints. But while there are plenty of ad networks whose job is to connect advertising agencies placing ads with the Web publishers who have space to sell, “there aren’t a lot of companies focused on the infrastructure of digital video and moving it from point A to point B,” Roland says.
Within a couple of months, Extreme Reach won’t even have to send copies of video ads directly to Web publishers. Roland says the company is about to upgrade its architecture so that it can host the videos on its own (or rather, Amazon’s or Nirvanix’s) servers; then, all publishers will have to do is embed code in their sites that invokes an external media stream.
That will be a big help for big clients like Geico Insurance, Roland says. “If they’re delivering video to 10 different Web properties, they may have trouble getting performance data back from all of them, and then aggregating and normalizing it,” he says. “If Extreme Reach has the assets and streams them, they are going to have 100 percent of the information about who saw each ad.”
I asked Roland whether he ever gets a sense of living his FastChannel life over again at Extreme Reach. “There’s a little bit of déjà vu, simply because we’re in a lot of the same markets, and it’s a very similar business that we have a lot of expertise in,” he says. “But what’s really interesting is that Extreme Reach is a much bigger vision—a more valuable vision, with a big future.”