VCs Fund and TV Ad Placement Firm
Bessemer leads a $6-million round for NextMedium.
NextMedium, a startup that recently launched a marketplace for product placement in television shows, said Monday it had raised a $6-million second round of funding led by Bessemer Venture Partners.
NextMedium has raised a total of $9.5 million from Ascend Venture Group, Globespan Capital Partners, and now Bessemer.
Advertisers and entertainment companies pay membership and transaction fees to participate in NextMedium's "brand integration" marketplace, called Embed™, which launched in May. The company is also working closely with networks, as well as with Nielsen Media Research to measure the success of product placement.
Embed™ has been a long time in the making. In contrast to the aggressive release schedules of many of today's startups, 17-employee NextMedium spent six years on the product, first laying out the technology and then securing industry cooperation.
In an interview last week, NextMedium CEO Hamet Watt said his company had not yet run through its funding, but he wanted to bring on Bessemer in order to capitalize on today's hot market and hire top talent.
NextMedium runs its business from Los Angeles, but its product development effort is in Mountain View, California.
No More Commercials?
Though some television watchers feel that product placement cheapens and alters the high art of TV, the age of Tivo and iTunes is forcing business models to change.
"The industry has operated in a certain way and been reliant on a certain kind of revenue-30-second commercials-for 50 years," said Mr. Watt. "People are fearful of the changing landscape, and I think that combination of greed and fear is making them look at a new way of doing things."
Product placement across all media categories was projected to be worth $4.2 billion in 2005, up from $3.5 billion in 2004, with the vast majority on television and in films, according to research firm PQ Media.
Mr. Watt said adjusting campaigns based on customer responses would help regulate overuse of product placement. "It's not like NASCAR," he joked.
"Everyone wants to see an alternative business model arise so that the brand marketers can continue to fund content," said David Cowan, a general partner at Bessemer who has joined the NextMedium board.
Mr. Cowan, whose firm is investing heavily in what he calls the "Television 2.0" space, said he thinks entertainment companies are finally ready for the '90s-era promise of bringing e-commerce and television to TV.
Bessemer's other investments include mobile video startup GoTV, ad analytics firm IAG Research, mobile television chip company Siano Mobile Silicon, and online video-sharing play Revver.