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Streaming video is advertisers’ shiny new toy.
But tech companies that have started in mobile display are optimistic about their chance to share in those video budgets.
Take PadSquad, which started in 2012 as a software provider to help publishers serve mobile display ads. PadSquad also built an in-house creative agency for brands shortly after launch.
Now, it’s getting into connected TV (CTV).
On Thursday, PadSquad acquired digital technology from ad monetization software company Source, including a video ad builder, ad server and content recognition technology. Terms of the deal were not disclosed.
Until now, PadSquad had no presence in the TV and streaming space outside of demo videos served in browser environments, founder and CEO Daniel Meehan told AdExchanger.
With the new technology, PadSquad plans to develop interactive ad segments that will be embedded in video streams, including on CTV.
Kin on CTV
As streaming continues to grow, the importance of CTV’s ad technology is clear, but acquisitions don’t fund themselves.
Last spring, PadSquad received funding from private equity firm Star Mountain Capital to make acquisitions that will grow its core digital ad serving model. (The company declined to share how much funding it holds.)
PadSquad is always reviewing new ad formats for mobile. But once customers started asking for live video products, he had to come up with a solution so customers wouldn’t have to look for other video options.
The company partnered with ad server Innovid earlier this year to begin creating interactive ads for CTV. But purchasing Source’s digital video ad technology, which includes image content recognition technology, made sense as a next step because PadSquad can use it to identify opportunities for interactive ads based on what’s happening on screen.
Video content recognition technology is “really where the rubber meets the road” when it comes to PadSquad’s CTV ambitions, Meehan said.
Asset transfers also seem to make sense for both parties. Source Digital is a software company that doesn’t work directly with brands, so “PadSquad is better equipped to promote these video assets to advertising clients,” Matthew Fusco, chief operating officer of Source Digital, told AdExchanger.
Fusco said that divesting this part of the business will allow Source’s digital division to focus on its publishing business, which includes software that helps publishers sell inventory.
Get recognized
PadSquad, on the other hand, wants to drive results for brands.
The reason behind the acquisition of PadSquad came from a desire to get its hands on more automatic content recognition (ACR), Meehan explained, referring to the technology in most smart TVs that tracks what a viewer is watching.
The source’s digital content recognition technology is wired to identify specific elements within a scene, which it can use to suggest opportunities for interactive ad units within the video ad architecture. For example, if an actress is wearing a yellow dress, PadSquad can trigger an interactive ad segment for a brand that sells a similar product.
PadSquad also plans to market some of these new ad units, although advertiser adoption may take a little longer because buyable ad units are still relatively new to video channels and especially TV.
But helping advertisers maximize their return on ad spend is a “huge part” of this acquisition, Meehan said. According to PadSquad research, viewers who see an interactive ad segment are 15% more likely to purchase a product compared to viewers who see a standard video ad.
Source’s digital ad server connects these ad units through supply-side platforms, including Xandr and Magnite. Advertisers can buy their ads directly through PadSquad or the private marketplace within their DSP of choice, Meehan said.
Marketing
But for now, these goals are still aspirations.
PadSquad’s next step is testing these new ad solutions with its brand clients and its ad verification and measurement partners, which include DoubleVerify and Oracle’s Moat.
The company hopes to attract new, video-focused advertisers who may not have previously considered PadSquad, Meehan said.
The company expects its new ad units to begin attracting more video and CTV budgets from advertisers in Q4 this year, adding that finding the right technology to do so is just one phase of the process.
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