The Future Of Online Video Advertising Is Here

picJeremy Ostermiller is the CEO and founder of Altitude Digital, a leading video and display advertising technology company. At Altitude Digital, Jeremy oversees worldwide sales and operations departments. In August Altitude Digital secured a $7M credit facility from Silicon Valley Bank. The Makegood recently spoke with Jeremy about the future of online video advertising and how Altitude Digital will play a part.

The Makegood: Altitude Digital is one of the leading programmatic SSP players, and one of the biggest independent players as well. Could you elaborate on what this means, and how the company uses this to its advantage?

As one of the largest video platforms, we can supply video at the scale and quality level that advertisers are looking for, but it is our publisher focused products that continue to drive our growth.

We have deliberately maintained our independence and entrepreneurial culture. As a privately held company, we aren’t focused on quarterly performance or earn outs. We are accountable to customers, not analysts or conglomerates, and this keeps the company focused on delivering a suite of video tools that help create efficiencies and improved performance for online video publishers. While we are focused on building technology that brings value to the ecosystem, at the end of the day we are bullish about helping publishers drive revenue.

The Makegood: Altitude recently received funding to ramp up operations. Could you discuss what the funding will be used for, and how it will help the company further grow?

We recently raised $7 million from Silicon Valley Bank. We’ve been profitable since the beginning, which has given us maximum flexibility in terms of financing options. Over the last year, Altitude has almost tripled its headcount, and we’ll continue to recruit all-star talent in the fourth quarter and 2015. We have doubled down on technology, with a parallel focus on the development and expansion of our platform and acceleration of our sales efforts.

This capital allows us to continue to step on the gas in both those areas, with an emphasis on building a next generation SSP and suite of tools for publishers. Our plan is to demonstrate the benefits of our new platform, Altitude ARENA™, to even more publishers and buy-side partners.

The Makegood: Could you talk about some of the marketplace trends? Have you recently seen changes in the industry?

First of all, we believe we are still in the first inning of the ball game when it comes to online video advertising. The rapid growth of online advertising is really driven by video and mobile advertising. This is where we’ve made our bets and built our business.

As an industry, we’ve been talking about the potential shift of ad dollars from TV to online for some time and that’s been slower than expected. In fact, traditional television is holding strong while online video continues to grow annually by double digits. The whole pie is getting larger, but online is not yet eclipsing TV ad spend. As a young and evolving industry, we are beginning to address issues that are constraining the explosive growth we all expect, but we aren’t at a tipping point just yet.

We’ve seen several IPOs and acquisitions in the past two years, with an acceleration over the past six months. This natural and necessary consolidation is creating fewer true technology platforms and is starting to blur the lines between media companies and technology companies.

There’s also a historic trend of pushing publishers to the side. I have been in the advertising business since 2005 and have seen consolidation before and at the end of the day, the publisher is usually squeezed while the advertiser benefits. Publishers are wise not to put all of their eggs in one basket when it comes to working with supply side technology providers especially in a still emergent category.

The Makegood: What do you believe to be inefficient in the programmatic video marketplace? How does Altitude battle these inefficiencies?

Too many companies are sitting between the advertiser and the publisher and creating inefficiency in the online advertising marketplace. The industry needs more innovation and less arbitrage, and we believe that with this inefficiency comes a great business opportunity for technology companies to either optimize connections between partners or to try to disintermediate.

We’ve been focused on the first approach, which is to optimize connections between partners. For example, we recently launched AIR, which stands for Advanced Impression Recovery. AIR helps detect and solve errors that often occur when demand partners try to deliver pre-roll video ads to publishers. By identifying these errors and resolving these errors, we’ve been able to increase publisher fill rates and help exchanges and other SSPs deliver more ads. It’s a mutually beneficially technology solution to a common problem.

Today there are a few large video platforms that work directly with publishers. There are certainly some similarities between these companies and their technologies, but in today’s environment we have all not only learned to co-exist, but to also cooperate to better meet the needs of the publishers. In an environment where there are few exclusive relationships with publishers, technology best serves the publisher when it can work with a variety of partners to improve overall performance.  If technology is not creating value within the industry, it is not a question of if your model will be threatened, but a question of when.

The Makegood: What do you see for the future of programmatic, as well as for the future of Altitude Digital?

The future of programmatic is moving more and more toward the mainstream marketplace. The stereotype of programmatic as a “remnant only” channel is eroding faster than many expected, as we are already seeing some premium publishers making large portions of their inventory available programmatically. The jury is still out on programmatic buying completely replacing direct, although it may be a good option for certain publishers.

Overall, programmatic buying and selling will be applied to higher and higher quality inventory. That being said, quality and viewability concerns still pose a risk to the future of programmatic. The industry is just beginning to address these issues with detailed standards, so the marketplace will continue to hold back the amount of spend moving to programmatic video until these issues are more thoroughly addressed.

At Altitude our vision is to continue to develop and expand our technology to help create a more efficient and authentic online advertising marketplace. Ad tech continues to evolve at a rapid pace and the growth in online video advertising will continue to accelerate. We believe our independence, entrepreneurial culture and technology focus will enable us to adapt and continue delivering solutions for video publishers. It’s an exciting time to be involved in the video advertising space, and we believe the best is yet to come.

The Makegood: Thank you, Jeremy.