New York-based interactive advertising firm BrightLine received $30 million from private equity firm JMI Equity, according to a press release. The seven-year-old company creates and implements ad campaigns that invite viewer involvement across cable, satellite and other TV platforms. Its clients include Unilever, Kellogg’s, and GlaxoSmithKline.

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The last official week of summer brought a slew of Northwest deals, to go along with today’s heat wave. Two of the year’s biggest financings happened in tech and life sciences, along with a big acquisition in healthcare, while a host of smaller deals went down in software, digital media, and advertising—and one company inched closer to an IPO.

—Seattle-based Integrative Diagnostics, Leroy Hood’s early cancer detection company, has raised $7.5 million out of a $30 million equity round, as Luke reported. The investors were not disclosed, but we’ll have more on this story soon.

—Seattle-based Free & Clear, which offers phone-based coaching for company employees battling tobacco addiction, obesity, and stress, was acquired by Inverness Medical Innovations (NYSE: IMA) of Waltham, MA, for $100 million in cash plus up to $30 million in follow-on payments, as Wade reported. Free & Clear was backed by Polaris Venture Partners, Three Arch Partners, and Kaiser Permanente Ventures. Inverness offers medical diagnostic tests and other disease management services for consumers.

—Portland, OR-based Ensequence raised $20 million, led by Clay Mathile, the CEO of CYMI Technologies (and former owner of Iams, the pet food company sold to Proctor & Gamble for $2.3 billion in 1999). It’s one of the Northwest’s largest tech financings of the year. Ensequence was founded in 2000 and is a leader in the interactive TV business, which lets viewers do things like call up additional information on the screen. There is some question as to whether the firm is moving its headquarters to New York, where its new CEO, Peter Low, is based.

—In the biggest life sciences venture financing of the year, Seattle-based Calypso Medical raised $50 million led by Skyline Ventures and Frazier Healthcare Ventures, with Bay City Capital and InterWest Partners also participating, as Luke reported. The funds will be used to expand Calypso’s worldwide rollout of its radiation pinpointing product, which helps radiation oncologists and technicians better treat prostate cancer. Luke also reported on the story behind the deal here.

—Seattle-based Getty Images, the creator and distributor of photos and other digital media, has made a $4 million strategic investment in Daylife, a New York media and content services company, according to the Wall Street Journal’s All Things Digital blog. The two companies have also formed … Next Page »

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In one of the Northwest’s biggest tech financings this year, Interactive television firm Ensequence, based in Portland, OR, said today it has secured $20 million in funding led by Clay Mathile, the CEO of CYMI Technologies and former CEO and owner of Iams (the pet food company sold to Proctor & Gamble for $2.3 billion in 1999).

Ensequence has also named a new CEO, Peter Low, who was formerly the company’s president and chief operating officer. He succeeds Dalen Harrison, previously of Intel, who remains on the board.

The Oregonian reports that Ensequence initially said it is moving its headquarters to New York, where Low lives. But in an interview, Low reportedly said no official decision has been made, and that the employment status and the role of employees in Portland (more than 70 out of a total workforce of about 100) would not change. The company has raised a total of about $97 million, according to the report.

Ensequence, founded in 2000, is a leader in Interactive TV, which lets viewers do things like bring up information on sporting events they’re watching, or watch multiple programs on one screen.

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Boston’s Backchannelmedia, whose “clickable TV” system embeds links in broadcast TV signals that consumers can activate with their remote controls to receive information about a program or a product via e-mail, said today that Gray Television (NYSE: GTN) of Atlanta will roll out the Backchannelmedia system to its 36 local broadcast stations.

That brings the total number of stations participating in Backchannelmedia’s system to 68 (including New England stations WCVB, WJAR, WTNH, and WCTX), covering more than a sixth of all U.S. broadcast viewers.

“This is our first paying contract for clickable TV—a huge milestone for us,” says Backchannelmedia marketing director Eric Martin. “The market trials continue up here in the Northeast but the fact that a broadcast group is on the record and willing to pay for it demonstrates that it has actual monetary value to broadcasters.”

We’ve profiled Backchannelmedia here and here.

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Things are really heating up in the casual games business. Today, Hong Kong-based Infinity Equity announced it has invested $20 million in Oberon Media, a major developer of casual games and gaming platforms. Oberon is based in New York, but has a publishing office in Seattle called I-Play. The news comes on the heels of last month’s $83 million financing of Seattle-based Big Fish Games (which was led by U.K.-based Balderton Capital), which seems to reinforce the strength and global reach of the Seattle-area gaming cluster.

Oberon is known for building gaming platforms, including billing and advertising tools, as well as publishing and distributing casual games across various online, mobile, and interactive TV platforms. Oberon acquired I-Play in 2007, which led Oberon to merge its Seattle-based game studio (Oberon Games) into the I-Play publishing division. Earlier this year, local gaming guru Don Ryan, who oversaw Oberon’s Seattle office, moved to New York and was promoted to chief operating officer.

Now it appears Oberon is making a play for China’s exploding casual-gaming market, which currently stands at 50 million users and $2 billion in annual sales, according to Infinity Equity. It will be interesting to see whether the company’s Seattle office plays a role in building relationships overseas. “Expanding our business into China is an important part of Oberon Media’s global strategy,” said Tal Kerret, chairman of Oberon, in a statement. “This new partnership will serve as an asset for extending our pursuits there and establishing an Oberon Media presence on the ground.”

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Microsoft said yesterday that it’s buying Waltham, MA-based Navic Networks for an undisclosed sum. Navic, founded in 2001, makes software for set-top boxes that TV advertisers can use to target ads at specific digital cable subscribers and measure their responses. Its software can also be used to add interactive features such as voting and polls—for example, a set of trivia questions that Navic recently offered to select viewers of Bravo’s “Project Runway”—as well as coupons and offers for additional information.

Navic, which had raised three rounds of venture financing totaling $43 million, will become part of Microsoft’s Advertiser and Publisher Solutions Group. The group runs digital advertising efforts across Microsoft’s entire media network, including MSN, Windows Live, Microsoft Office Live, Xbox, Microsoft Live Search, and Facebook.

The classic joke in the advertising business is that advertisers know they’re wasting half of their money—they just don’t know which half. Navic claims that its ad placement service, called Admira, combats that problem by “addressing” TV ads only to viewers who are likely to respond, based on measurements of their previous viewing behavior. Brian McAndrews, the senior vice president for Microsoft’s Advertiser and Publisher Solutions Group, said the Navic acquisition will help Microsoft partners manage their TV advertising spending better and maximize their returns.

“Viewers across North America are engaging with relevant advertising and interacting with their TVs in ways never before possible,” Navic CEO Chet Kanojia said in a statement. “Joining forces with Microsoft will enable our common vision of addressable television advertising solutions to continue to flourish and better meet the needs of our industry partners….We look forward to extending our technology into a vast array of new markets and software solutions.”

Navic is just one of a cluster of New England-area companies offering technologies that tailor advertising for interactive home video. Newton, MA-based Extend Media has a system for inserting fresh advertising into on-demand Internet video. Acton, MA-based SeaChange International, a leading maker of backend software and hardware for video-on-demand services, also has systems that can insert ads dynamically into on-demand video streams. And in the area of interactive coupons and information offers, Navic competes with Backchannelmedia, a Boston interactive TV company we’ve covered several times lately.

Navic’s lead investors were Pilot House Associates, Highland Capital Partners, Himalaya Capital Ventures, Pequot Ventures, and Lauder Partners.

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Backchannelmedia, the Boston interactive-TV startup we profiled in November 2007 and again this April, said today that it’s signed up two new partners to test its system for bookmarking web addresses promoted on live TV. Rhode Island NBC affiliate WJAR-TV and and Manchester, NH ABC affiliate WMUR-TV will both insert signals into their over-the-air broadcasts that cause clickable onscreen icons to appear onscreen whenever TV shows include bookmarkable URLs. WMUR’s sister station in Boston, WCVB Channel 5, is already testing the system.

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Back in November, we covered a Boston company called Backchannelmedia that’s giving broadcasters and advertisers a new marketing channel by adding a Web bookmarking function to TV programming. I stopped by Backchannelmedia’s office for a demo of the latest version of its system a couple of weeks ago, and I’ll be sharing a few of my thoughts about the whole experiment as part of a panel discussion tonight on WGBH’s Greater Boston with Emily Rooney (7:00 pm and 12:00 am on channel 2).

[Update April 24, 2008: The "panel" on Greater Boston last night turned out to be just me. Emily asked some great questions. The video is up on WGBH's website for the next two weeks.]

Unless you’re watching carefully, you may not be aware how many times every day TV broadcasters flash Web URLs at you on the screen during their regular programming (not to mention during commercials, many of which also contain Web addresses). It’s a lot. And given how much effort many newsrooms and production studios are putting into their websites these days (think CNN.com or Battlestar Galactica‘s “webisodes” on the Sci-Fi channel site), it’s obvious why broadcasters would want to try to drive TV viewers to the Web. The problem is that most URLs are hard to remember, and few viewers have a pad and pencil or an open laptop handy to copy them down.

Backchannelmedia has come up with a fix for that. Behind the company’s system, of course, there’s a lot of complicated software involving broadcast servers, Web servers, and your cable set-top box. But on the surface, it’s very simple—as it needs to be, if broadcasters are to have any chance of coaxing millions of viewers to use it. Basically, broadcasters insert a code into their programs that causes a special icon to appear on your TV screen alongside a URL or any other “call to action.” If you click OK on your TV remote while the icon is showing, Backchannelmedia will send you the link electronically for later reference. You can view all of your saved links at Backchannelmedia’s portal site, or you can have them e-mailed to you.

I gave the system a try during a visit to Backchannelmedia’s media room, where the company has a Windows PC desktop running on one big screen and a TV signal (being transmitted by the company’s in-house TV server) showing on another. During a recording of Grey’s Anatomy, an icon popped up offering background information about the cast. I clicked the TV remote’s OK button, and within 15 seconds or so, a link to the Grey’s Anatomy website showed up in my Backchannelmedia inbox.

The company is working with local cable providers and TV stations to set up a test of the system using live broadcasts in 100 homes in the Boston area, expanding to 10,000 homes by the end of the year. And it’s collaborating with Boston station WCVB to test an over-the-air version of the system. (It’s easier to implement the bookmarking function over cable systems, which have a built-in “return path” that tells the system when viewers are clicking their remotes. But for over-the-air broadcasts Backchannelmedia has come up with an alternative system that connects TVs and set-top boxes to the Internet via home wireless networks.)

The possibilities for TV bookmarking are pretty broad—it’s easy to imagine shopping networks providing links to specific items in Web-based catalogs, for example. The real question is whether broadcasters using such technologies can train TV viewers to engage more actively with what they’re watching. TV has been famously described as a “lean back” medium, in contrast to the “lean forward” nature of the Internet. In other words, many TV watchers are couch potatoes, and seem to like it that way, as the failure of quite a few interactive TV projects over the past three decades has demonstrated.

But Backchannelmedia has mustered extensive statistics arguing that people’s TV viewing habits are already becoming more interactive: for example, more viewers have the remote in their hands all the time, often so that they can skip forward over commercials during shows they’ve recorded on their DVRs. (Because it’s based on codes embedded in TV signals, rather than on the exact time an icon was broadcast, Backchannelmedia’s bookmarking system works even for recorded shows.) In a poll of more than 2,000 TV viewers conducted for Backchannelmedia by the Parthenon Group, nearly 60 percent of respondents said they “never” or “infrequently” visit website URLs shown during TV ads—but the same number said they would click on an icon using their remote if it meant that they’d get a discount coupon via e-mail.

Will it work in the real world? My guess is that the success or failure of Backchannelmedia’s system will pivot largely on the quality of the content that broadcasters choose to provide in response to viewers’ clicks. Bookmarking is a natural activity online—and there’s a growing collection of tools to make it easier. Speaking for myself, I can imagine transferring that same habit to my TV viewing—but only if the content I was bookmarking turned out to be genuinely useful, and not simply a new form of spam.

As with all media, I’m sure some TV producers will take the high road, while others take the low; just imagine all the rich online resources that could be embedded in a program like WGBH’s Nova, and the equally amazing collection of celebrity-gossip trash that you’d likely get from the producers of E! In short, TV and the Web seem like a natural marriage—but I’m not sure how the kids are going to turn out.

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Interactive television is the hottest technology that never was. Broadcasters and cable companies have been tinkering with the idea since at least 1977, when Warner Communications rolled out a two-way service called Qube that allowed subscribers in Columbus, OH, to participate in game shows and electronic town meetings through their set-top boxes. Though it was popular and technically successful, Qube was too expensive to maintain and was eventually phased out. Countless other schemes attempted in the United States, Canada, and Britain have met similar fates. Today, ordering a movie on demand or phoning in your vote on American Idol is pretty much the limit of “interactivity” on TV. (Microsoft’s WebTV, now called MSNTV, doesn’t count—it’s just a way to surf Web pages over a dialup, DSL, or cable connection without a PC.)

But now there’s a company in Boston that wants to take another run at interactive TV—this time, coordinating it with the interactive media that really did succeed, the Internet and the World Wide Web. Backchannelmedia—which announced today that it’s completed a $9.5 million seed funding round—makes software that runs on set-top boxes and cable companies’ distribution networks. The software allows programmers to show interactive pop-up ads during TV shows; viewers can “tag” or “bookmark” this content using the OK button on their normal remote control, and the information is then forwarded to a customized location on the Web, where viewers can act on it later via their computers.

“Say you’re watching the Grammies and the Dixie Chicks are on,” explains Daniel Hassan, Backchannelmedia’s chairman and co-CEO. “You have a consumer sitting at home watching when they win the award, and they see an ad that says ‘Go to iTunes now to download this song.’ The consumer clicks the OK button and a link to that exact song is deposited into their iTunes account. Or they’re watching Oprah’s book-of-the-month club—one click and that book is not only dropped into their Web portal inbox, but if they’ve set it up through our Web services, it can be dropped into their personal Amazon shopping cart. It’s all about using a TV property to drive clicks to the Internet.”

The system even works when consumers are viewing shows they recorded on their DVRs. But while people viewing Backchannelmedia’s ads are busy shopping and requesting information and content downloads, the real action will be going on behind the scenes. The company’s pitch to its potential licensing partners—cable companies, TV producers, networks, media sellers, and advertisers—is all about bringing Internet-style measurability and accountability to the world of TV advertising.

For conventional television ads, ratings from organizations such as Nielsen Media Research are the only way to get an idea of an ad’s impact—and even then, the data measure only impressions, not actions. Backchannelmedia’s software, by contrast, counts consumers’ “click-throughs” and produces an exact return-on-investment breakdown for each interactive ad. “Our goal is to supply real-time response data and allow advertisers to make better decisions about their media buying,” says Hassan.

The company, which has been around since 2000, has raised nearly $10 million over the past two years from unnamed angel investors. It’s now preparing to mount a trial version of the service in the Boston area in the first and second quarters of 2008. But what makes Hassan think that interactive television’s day has finally come? “The reason it became such an expense to roll out [an interactive TV system] in the 1990s was the need to consolidate the cable system” around a smaller number of providers and set-top-box technologies, he says.

“The conversion to digital has ushered in new technologies and delivery systems that allow for a better interactive platform,” says Hassan. “The hardware heavy lifting has been done, including consumers’ existing remote controls and set-top boxes. We consider ourselves the finishing touch—the advertising layer.”

Backchannelmedia’s ability to work with existing television technology—and the fact that its service capitalizes on existing TV viewing habits, rather than requiring consumers to develop new ones—may be its biggest strengths. Though there’s been much hand-wringing among producers and advertisers about the defection of audiences from television to the Internet, surveys show that there are still 196 million people in the United States who watch television every day, for an average of 4.5 hours a day. Equally important, more and more people are watching TV and using their computers at the same time; 58 percent of Internet users surveyed in October by Burlington, MA-based Burst Media said that they watch TV while they’re online.

Numbers like that point to a rather large upside if Backchannelmedia’s interactive ads were ever to catch on. “If we can entice consumers to click even once per hour, that’s 27 billion clicks from the TV to the Internet per month, which far surpasses the click-through rates anybody has managed in the search business,” Hassan points out.

Google, are you watching?

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