Rapt Media Raises $3.1M to Drive Interactive Video Advertising

8/12/14Follow @MichaelXBD

Online videos seem to be “the next big thing” in digital advertising, and companies that help clients create content stand to benefit.

One example is Rapt Media, a Boulder, CO-based startup. The company recently raised a $3.1 million Series A round.

Rapt Media makes cloud-based software that helps customers create interactive videos and integrate them into their websites. The videos give viewers options about what they’d like to see a character do or what product they’re interested in, for example. Rapt Media collects data about their choices that allows advertisers to target media to viewers and determine what parts of a video are popular and lead to new sales or click-throughs.

Rapt Media clients include consumer brands trying to connect with potential customers and enterprise-sized companies trying to sell business-to-business software. They also include Cinemax, which used Rapt Media to develop a site for its “Banshee” series, and Martini Racing, an Italian Formula 1 auto racing team.

Boulder Ventures, a venture capital firm based in Boulder, led the financing round. The investment is the first money Rapt Media has raised from venture investors, Rapt Media co-founder and CEO Erika Trautman said. The new funds bring the total amount the startup has raised to $7.5 million, with prior investment coming from Golden Seeds and angel investors.

Rapt Media was founded in 2011 and was originally named FlixMaster. The company was a member of the 2011 Techstars Boulder class.

Rapt Media will use the investment to expand its sales and marketing team, and that includes opening offices in New York City and Los Angeles. Trautman said that while Rapt Media has worked with clients around the world, it is important to establish itself in those cities.

“Bringing this capital in now is going to let us establish presences in the cities that are really the heart of video production and great brand and marketing initiatives,” she said.

While Trautman declined to get into detail, she did say the company’s revenue growth was “an order of magnitude higher than we’ve seen previously.” She thinks the growth is attributable to two major trends that are finally getting traction in the advertising world.

First, companies are realizing the possibilities of interactive online videos and how it’s a new category of advertising.

“The broad concept that video online is fundamentally different than television, and that you can do things and achieve things and have a relationship with your viewers in a way that’s totally unique, I think that has hit the marketplace for sure. That’s mainstream now,” Trautman said.

Companies have realized they need to do something beyond just posting a video if they want to truly engage viewers in a way that gets results, like click-throughs or sales.

“If all you do is play a video on your website or smartphone, and it doesn’t do anything else, it’s going to feel like an antiquated, broken experience,” she said. “The idea that video is this one-size-fits-all thing you send out into the world and hope the message will resonate is no longer true. We’re seeing companies get really specific about providing tailored content and understanding who they’re talking to through interactive video.”

The second trend is the long anticipated rise of mobile advertising. Trautman joked that while “it’s been the year of mobile since 2008,” it seems that this time it’s really happening.

“Something has happened in brand marketing where companies have realized that mobile audiences have hit critical mass, and they’ve got to start thinking about their Web experiences and if not be mobile first than certainly mobile inclusive,” she said.

Rapt Media also recently announced its software now integrates with the popular Eloqua marketing automation platform, which shows advertisers are getting serious about using videos to drive sales.

“You can understand so much more about content consumption, what’s working, what’s driving value, than ever before. So there’s tremendous pressure for marketers to show attribution, return-on-investment, and get iterative and smarter about their marketing,” Trautman said.

With Eloqua, Rapt Media clients can collect information about the choices their potential customers make as they navigate through a video. That can be used to target additional content to the customer and help with lead generation, she said.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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