New York media marketing startup Simulmedia announced it had raised $8 million in a second round of financing. Time Warner Investments led the round while previous investors Union Square Ventures and Avalon Ventures also participated.
Simulmedia analyzes anonymized individual set-top box data from cable and satellite TV providers. The company takes the viewing data and groups viewers based on similar viewing patterns, rather than the traditional age and gender demographics used in Nielsen ratings.
“There are far more granular ways to target viewers than age and gender,” Simulmedia founder and CEO Dave Morgan said. “We’ve found age and gender are terrible indicators of what people will watch. We find that in TV birds of a feather flock together when it comes to watching programs.”
Simulmedia uses their deep knowledge of viewer behavior to recommend more effective promotional strategies for increasing show ratings. This was one of the main drivers for Time Warner’s investment, according to Morgan: “I think they’re betting on us because the entire company is betting on TV content. The bulk of their revenue is from video programming.”
Simulmedia also uses viewer data to help cable and satellite companies take traditionally low cost ad inventory and assemble it into more attractive packages. Morgan said, “We find local spots that are generally not priced very well and tend not to sell out and we help them repackage those by the kinds of people that like those shows not just the type of program.”
Increasing the efficiency of promotional events is attractive to networks that spend over $10 billion a year promoting their programming. Less than $400 million of that $10 billion goes to the cable and satellite companies, according to Morgan. He estimates that in the next few years Simulmedia can quadruple that amount.
According to Morgan, Simulmedia has data from over 15 million set top boxes, which he claims gives it access to more TV viewership data than any other company. Morgan certainly knows something about space having previously founded the behavioral targeting company Tacoda, which was acquired by AOL for $275 million in 2007.
Simulmedia claims to have conducted field trials with 8 different broadcast and cable networks, driving between 50 percent and 350 percent more viewers per program than traditional methods. The company’s sole focus is on programming promotion, not the general television ad market, which Morgan believes is the key to increasing viewership.
“We have an advantage in that we’re focused on program promotion. More than ½ of TV viewers in the US today turn on their TV’s without having yet decided which shows they want to watch.” Morgan said
Simulmedia is by no means the first company to make an attempt at behavioral targeting in the television sector. Google’s foray into television advertising over three years ago failed because they were unable to create a meaningful feedback loop that accurately measured a campaign’s effectiveness. Morgan believes Simulmedia’s large data sets and tight focus will allow them to succeed.
“We have an advantage in that we’re focused on program promotion. More than half of TV viewers in the US today turn on their TV’s without having yet decided which shows they want to watch.” Morgan said. “We know what people are watching and how they respond to promotions. We can iterate on a regular basis every time we see feedback.”
Companies: Simulmedia, Time Warner
People: Dave Morgan