Last week, Los Angeles-based Gorilla Nation and Encino-based Panache (www.panachetech.com) inked a deal to use Panache's video technology for pre-roll and other video advertising. We hadn't heard of Panache before, so we decided to talk to the company about what it does and where it fits into the video advertising market. Steve Robinson, CEO of Panache sat down with us to help us understand the need for the company's technology, and how it came about. Steve spoke with socalTECH's Ben Kuo.
What's the story behind Panache?
Steve Robinson: My business partner, Alex Krassel, and I, had been running a software services company called Panther Software since the mid 90's. We started around 1996, building very high performance transaction systems for customer such as Ticketmaster, Citicorp, EDS, Pegasas Solutions, and working with video companies like Motorola's Connected Home Solutions Group. In 2004 and 2005, we started seeing a need for a new type of ad delivery system that was dynamic in nature, and could deliver ads that were relevant to content and viewers, and which could work across multiple platforms. We looked at some of the technology we had been developing for customers, such as Motorola, and came to the realization that delivering ad units not encoded into a video stream made sense. It made sense to take advantage of the convergence of video across all platforms -- the web, or television set top boxes, and to deliver ad units at view time.
How long have your products been available?
Steve Robinson: Panache has been available since last summer. We went to market in Winter 2006 with some early customers, friendly broadband publishers. This summer, we launched our Panache 1.5 product.
Who are the types of customers who use your product?
Steve Robinson: The customers I can tell you about are the ones we have announced. Break.com is a publisher, and on the ad network, we just announced Gorilla Nation.
Tell me a little bit about your technology, and what's special about what Panache offers?
Steve Robinson: The technology we have was really built in our predecessor company, Panther Software. There are three pieces -- a piece that runs inside a video player, whether that is a set top box or flash player, or Windows Media, or Silverlight -- which hooks into a video stream and connects into an ad server. The core of our technology is the back end, a software-as-a-services business that delivers the ad maps to the player. That provides the interactivity within the video, the viewing and measurement, the core of all of it. That captures information and delivers it to our service center, which is then delivered to our customer's systems. The third system is a tool that allows publishers or ad networks to create opportunities--it allows them to build ad maps, which goes out and pulls down advertising at runtime and view time. Those three pieces of technology come together -- Our player, the Panache Builder tool, and our back end servers -- to create a scalable solution, which delivers 100 million ad maps each day, and gives insights into a video timeline, how to get it there real time, and render it in the player.
How are you funded -- did you bootstrap this or get some funding?
Steve Robinson: It's a little bit of both. The founders of Panther Software, Alex Krassel and myself, started the company with a private equity group out of Minnesota, MJK Holdings. You may not know of them, but they were behind Digital Insight. MJK founded and funded Digital Insight, and actually owned it until Intuit purchased it and took it private. We've been close to MJK as a services company--as Panther we helped them to build software for their companies. We are very close to their principals. They immediately jumped on board. Now that the market is very good, and the timing and our customers are lining up, we're just now talking to VCs on our next round of financing.
Having worked in the video advertising market, where do you see the development and maturity of the market right now?
Steve Robinson: It's very, very early. We're the first batter in the first inning, and we're on deck. It's very early. What we're finding out there is that there are lots of blue chip publishers -- networks, and major video websites -- and they see how the Internet is taking off, and is definitely going to be a place where people go to watch video -- whether that is short form or long form content. It's very relevant. They are scratching their heads, and trying to figure out how to monetize this. Everybody realizes this is not going to be through subscriptions, it's going to be advertising. They're trying to figure out what's the right way to monetize this, and what are the right things we need to do, what are the ad units, what are the different places to sell, and what are the advertising plays. They are trying to figure out how to syndicate content, what the ad units need to be on their portals, versus when they syndicate to blogs, and how do we monetize that. It's a struggle. Why people have grasped the problem, is unlike on television, or cable, or satellite--every time someone views a video there's more cost. They need to figure out the P&L on how to monetize video, and how to use advertising effectively. They need to figure how to offset the cost of content, and turn this into a profitable business. That's why we see so much opportunity with Panache. It opens up the video timeline.
We often hear debate about ad placements, and what's the best--from pre-roll, post-roll, to overlays. From your experience, what's best?
Steve Robinson: On the Internet, what we're seeing as the most effective are the ones that the viewers can be informed that they are there, but where they do not cause the viewer to go away from the media. We are seeing a decline in pre-roll values, in the industry as a whole, because users don't want to sit through pre-rolls--especially with short form content. You need to come up with new ad units--we are doing this in our labs--where you can engage users without disturbing the video viewing process. Panache will be announcing some of these ad units over the next few months, which will entice users, built value to advertisers, be measurable for advertisers, without disturbing the user. That's the best type of advertising available.