Facebook Partnership a Boon for Video Technology Firm Bidalgo

Facebook marketing partner Bidalgo targets a tripling in sales in 2015 as its new technology to automate the process of making personalised online video advertising benefits from Facebook's growing share of the video market.

Facebook is becoming a leader in the video market as users prefer to watch video ads over static images, said Peleg Israeli, general manager of Bidalgo's Israeli operations.

Videos are expensive to make and an advertiser usually makes only one or two versions.

The Bidalgo executive said his company's technology, called ADaptation, can automatically turn one video into as many versions as needed, so that targeted audiences will see images they respond to most. For example, a German audience might see a German flag in one video while users in France will see their flag.

The product should account for as much as half of Bidalgo's revenue in the coming year "and down the line much more than that," Israeli said.

He said automated videos will give Facebook an advantage over Google's YouTube, as Facebook's core technology can identify users "in the most accurate way".

Google remains the leader in long-form video but is facing mounting competition from Facebook in the short-form market for videos that run up to several minutes.

Facebook has said it gets over 4 billion daily video views with more than 75 percent of that on mobile.

IHS senior advertising analyst Eleni Marouli said video is the next big project for Facebook, which needs video to lure branded advertising dollars away from TV.

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"Dynamic creative ads are a new, experimental way of providing video advertising," she said, adding that Facebook needs to partner with or acquire companies with this type of technology.

"The fact that they (Bidalgo) have dynamic ads which change based on gender or location can be a great asset," she said.

A Google spokesman said growth in viewing time on YouTube is up 60 percent in the latest quarter, its fastest growth in two years, and that for the online video market to grow more players are needed.

The global mobile advertising market is expected to surpass $100 billion (roughly 6,40,884 crores) in spending in 2016, up 430 percent from 2013 and accounting for more than half of all digital ad expenditure, according to market research firm eMarketer.

US-Israeli Bidalgo's technology targets mobile app and game developers, who have been quick to adopt mobile advertising. Clients include online gaming firm 888 Holdings and Zynga.

Bidalgo, which has 40 employees, has been profitable for about a year, with a target of $100 million (roughly Rs. 640 crores) in sales this year, Israeli said. It competes with San Francisco-based Ampush and Boston-based Nanigans.

Companies wishing to advertise on Facebook must bid for users that they wish to see their advertising. Bidalgo's algorithms test an ad against multiple audiences to understand which segments are relevant and what is the right price the advertiser should offer.

© Thomson Reuters 2015