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TRANSCRIPT: (edited lightly to improve readability)
Tal Chalozin: 00:00 Innovid is what we call a video marketing platform. It's a technology platform sold to marketers, brands executives, and agencies that lets them do three things. First and foremost what is called an ad server. It's a technology that actually streams the ad to every website. So if a marketer, let's say Chrysler, or Proctor & Gamble or Best Buy, or others is advertising on YouTube or Hulu or Fox or NBC or New York Times there's a centralized platform that you can actually manage the campaign, upload the MP4's and actually do the streaming and make decisions on now on which video file to serve. So right now we're very fortunate to be the largest video ad server in the world and in many other countries in the United States and many other countries that we operate in.
Tal Chalozin: 00:51 A little over a third of all video ads in the United States are being streamed by Innovid. So if you tune into every website and every app, let's say Hulu, one out of three ads, and as a matter of fact on Hulu, it's probably even higher than that. Almost one of every two ads would be, one's coming from Innovid every day. We stream roughly 450 years' worth of ads. And this is just ads content. So we stream a lot of videos. To complete the story of our platform. At a core it's an ad server. And then on top of that there are two applications. One is around creative and the other one is around measurement.
Announcer: 01:31 The video insiders is the show that makes sense of all that is happening in the world of online video as seen through the eyes of a second generation codec nerd and a marketing guy who knows what I-frames and macro blocks are. And here are your hosts, Mark Donnigan and Dror Gill.
Dror Gill: 01:51 Today we have a very special guest and an old friend of mine Tal Chalozin who is the CTO of Innovid. Hi Tal. Welcome to The Video Insiders.
Tal Chalozin: 01:59 Hello Dror. Hello Mark. Thanks for having me. It's a true honor.
Mark Donnigan: 02:03 Yeah, welcome Tal. So tell us about Innovid.
Tal Chalozin: 02:07 Innovid is a software company that I had the honor of starting together with my two friends and co founders, Zvika Netter our CEO and Zack Zigdon who runs all of our international business. And myself, it's a company that we started back in 2007. Before I explain what we do, just to take you back almost 13 years ago, this is the time after Google acquired YouTube and Hulu as a streaming site was kind of an inception mode. NBC and News Corp started this operation to bring streaming television into the internet.
Tal Chalozin: 02:49 And what we said back then is that we believe that the future of television is over IP and to be streamed. We thought that when this would happen the one thing that we really want to tackle is the viewing experience around the advertising. Because it was clear that marketers and ad dollars take a very, very important part of the experience of television subsidizing content and creating the access to so many different people. But it's also clear that sitting through a pretty boring 30 second spot and that every person around the United States in a broadcast time window would see the exact same ad. It's kind of silly. And so we went on a journey to build a software that helps to create a better viewing experience around commercials.
Tal Chalozin: 03:44 So we started with the technology, with technology that allows what is called in kind of layman terms virtual product placement. It was a computer vision technology that lets you process videos and reconstruct the 3D. So understanding occlusions and backgrounds and foregrounds and planes and allow you to render a product a 3D product in 3D images into the shot. And it looks like as if it was there while the content was shot while reproducing all the shades and lighting and again, occlusion and, and things like that. This was where we started. We got a bunch of patents. This is how we raised our A round back then. We got so many awards. It was awesome. But then what we learned is that it's amazing, but advertising is a business of scale for marketers to actually play.
Tal Chalozin: 04:38 One of the main things that marketers gain out of television is a massive megaphone that lets you tell your story to millions, if not hundreds of millions of people in 30 seconds. So then we went on a journey to better learn this business and expanded more and more capability and fast forward to today. Innovid is what we call a video marketing platform. It's a technology platform sold to marketers, brands executives and agencies that lets them do three things. First and foremost what is called an ad server. It's a technology that actually streams the ad to every website. So if a marketer, let's say Chrysler or Procter and Gamble or Best Buy or others is advertising on YouTube or Hulu or Fox or NBC or New York times there's a centralized platform that you can actually manage the campaign, upload the MP4's and actually do the streaming and make decisions on which video file to serve to the individual that is streaming the content.
Tal Chalozin: 05:48 So right now we're very fortunate to be the largest video ad server in the world. And in many other countries in the United States, many other countries that we operate in a little over a third of all video ads in the United States are being streamed by Innovid. At a core it's an ad server. And then on top of that, there are two applications. One is around creative and the other one is around measurement. Our headquarters in New York. There's 350 people, a big R&D center in Israel and then offices across the U S and in Europe. And in APAC. If you read the trades, it seems like the future of television has no ads. Disney Plus, Netflix, Amazon, Apple, all of the big services that made a lot of splash in the press toot the horn of no ads.
Tal Chalozin: 06:43 This is very nice for marketing, but in reality advertising dollars pays the bills that makes so many pieces of content to be streamed. The subscription services could not really thrive on subscription alone, let alone when you're talking about a massive global service that would like to reach hundreds of millions of subscribers. You cannot do that only with subscribing. With subscription dollars or advertising is a very strong market and in the future will be that. Easy testament is that just last week NBC launched or Comcast launched there foray into that game called Peacock. And the main thing that they said is that, Hey there's so much noise around advertising, about no ads. This cannot work. We will include ads.
Tal Chalozin: 07:36 And this makes to the second part of what I wanted to say about the future is that, but they put a lot of emphasis around ed experience. So it's not that you will see ads in the same way that you're used to watching television. There will still be ad breaks, but it will look and feel very, very different than what it used to be on television. And we play a very big role there and in other places. And we think that yes, the future of television is over the internet, over IP. The future of television is with ads, or at least in some capacity of it, but it would look and feel much different.
Dror Gill: 08:14 I want to ask a question regarding the, the ad server component. And these ads go interleaved into content experiences sometimes before or after or during the actual streaming of the content. So how do you match the resolution and the quality of the ad that you provide to the actual content that is being streamed? Because I don't assume that somebody watching a 4K movie would like to be interrupted by like an, you know, an SD, low quality ad. It would probably be quite annoying.
Tal Chalozin: 08:52 I have so many things to say about this stuff. First of all, before I answer exactly how we did it I can tell you that people think that the internet is so advanced in 2020 so all of this problem is practically solved. And there is no real problem to bring television over the internet and it's not really true. I'm sure you know you know, very well the general standard in the video ads industry right now is that we as the server that generated the file and hosts them, would create an XML template called vast V A S T and put multiple video renditions in a file and create a manifest that would have different renditions of and actually different encoders as well.
Tal Chalozin: 09:44 Of the file. It used to be, we used to put FLV and other stuff. But right now it's all MP4 containers. But anyway, you put multiple renditions and then the actual player picks the right one and the player, essentially what it's doing is doing playlisting. So picking the right ad at the right time and there is a, in the last, the last few years, but honestly, just in the last year, there is a big change in the way video ads are being streamed. Moving from what used to be called CSAI client side ad insertion, AKA playlisting. So on the client you download some, some type of playlisting and then you just move between different files even if it's the main content - it doesn't matter the rendition, you would still switch between different files that you do progressive downloads for.
Tal Chalozin: 10:45 Most of the very large sites and today apps are what is called SSAI server-side ad insertion. Essentially it doesn't matter what file we bring. You convert it into an HLS stream, create TS files, and then do kind of the, the term that everyone is using is manifest manipulation. So just manipulate the M3u8 and swap packets, TS files inside the M3u8. I hope that I don't need to explain everything that I'm just saying, but stop me if you want me to. So essentially let's say on Hulu, this is how it works. You will tune into a stream and you hit play on an episode of a, I don't know, The Good Wife on Hulu. What they will do, they will go, let's say this is 48 minutes of an episode or 21 minutes of an episode with multiple ads that need to be weaved throughout. So what they will do, they will do a server side call to all the different ads and then get either an MP4 and do just in time transcoding for it. Or, if it's pre-prepared, like a lot of the things that we do you would get the actual TS file and then just merge it into a single M3u8 with content TS files in the right rendition and the ads.
Mark Donnigan: 12:09 So Tal, are you actually able to get the, you know, I'll call it the mezzanine file of the ad, and then you can create a high quality or at least the highest quality possible for the, you know, target resolution and bit rate or are you limited by the fact that sometimes, you know, you may get a mezzanine quality and other times it may just be a 1080p in which case Dror's example of like a 4K. You're just limited. I mean, you have the quality you have. So can you tell us, shed some light on that?
Tal Chalozin: 12:43 It's a fascinating point. This is an uphill battle for us because we are, we're still an intermediary. We're not the post production shop at that makes the video file, so we're limited to whatever you would get. So yeah, the intention is to get a Pro Res or a mez file, mezzanine file, of the ad that allows us to do transcoding into whatever we want. But, that's not the reality all the time. In many cases we would get to your example, a 1080p is a good case. In some cases we get 720 and sometimes we even need to up convert it, which clearly is not really working.
Tal Chalozin: 13:34 And the reality is that the 4K streaming of ad supported content is not a real thing as of right now. But, 1080p is definitely one that is. And again, we're in 2020 right now and you can open whatever app without naming names, but you can open one of the biggest apps out there and I'm sure you would get to an ad break and even an unaided eye can see that it's a totally different rendition of the ad, even different audio, let alone volume normalization. But even just the quality of the encoding is significantly different or lower than the actual content. And this is a common case or the state of the internet right now.
Dror Gill: 14:24 But this is something you're trying to avoid?
Tal Chalozin: 14:26 We're definitely trying to avoid the way that we're doing it is that if you think about it, there are two inputs to our system. One is the ad itself, literally, again the mez file, Pro Res, whatever container that is, an MP4. And then, what is called in ad terms a media plan. Media plan is saying that we are Chrysler, the campaign starts in this date and ends on this date, there is X number of million impressions on YouTube, then on Snapchat, then on Hulu, and then the full list. It's a very complicated meta data of the whole campaign. So those are the two inputs that we're getting. Historically that was just an upload. So in our system, you would go and just upload the files.
Tal Chalozin: 15:13 More and more we're trying to get down to the source and create some type of an integration with the, with the DAM, the digital asset manager. Let's say, again, this is a Chrysler commercial, Chrysler 300 commercial. Someone actually did the post for it, and they do have the approved asset at the best quality possible. But those are not our customers. So sometimes we don't get access to that and we need to beg the customer to get that and try to explain what's the outcome if they don't get it. So what we're trying to do is to get down to the source as close as possible. So then that post-production shop would actually have an API to us, or even if they upload, they would upload the source and not have a downsample of it.
Mark Donnigan: 16:05 So our audience, are largely encoding engineers, video engineers, and we just hear over and over again incredible frustration about this. Dror and I were just talking to a very large live sports streaming service last week and the person responsible for encoding was lamenting that whenever there's issues with quality, it's because he can't do any better. It's a source issue! The high quality asset exists. Why can't we get access to it so that we can provide an incredible advertising experience. And I'm just wondering, how do we fix this?
Tal Chalozin: 16:50 How do we fix that? As more hours per day continues to pour into the connected, let's call it the connected television space, and as more and more ad dollars flow in there, and then more and more people cut their cord or shave their cord or are cord nevers and haven't even been exposed to traditional television, this becomes the norm and not the new thing. It's essentially a supply chain or a workflow problem because as you said, the file is there. It's not that someone is shooting on an SD camera and now you, you're stuck with a shitty file. People are using RED cameras to shoot it. So yeah, so it's more of a workflow problem. And this is what we set out to do is to just remove the clutter and connect everything in an industry that wasn't connected. Ads on television, still are being delivered predominantly through FedEx with cassette tapes that are being sent to local TV stations.
Tal Chalozin: 17:50 This is still a thing. We're moving from this world and now talking about getting a mezzanine or 4K file. I'll tell you about one thing that I'm very keen on, is that another thing is getting the raw asset is one thing. And then another thing, if you look at it, there's multiple parties on the internet that are getting an asset and transcoding it. So let's say that we get the video file. Probably Facebook got the video file as well, maybe not through Innovid. And they also transcoded the video file and then YouTube or Tik Tok got the video file somehow. And then sometimes clients would use Innovid. Sometimes you would go directly into YouTube and upload the raw file. And maybe NBC would get it through some other distribution channel to the broadcast side.
Tal Chalozin: 18:44 And then when they run it online, they would take the broadcast file and transcode it as well. So there was multiple people or organization that got the raw footage and then they're in charge of transcoding. This is pretty stupid. It should be some type of a centralized repository because there is an ID to every file and there is an initiative called the Ad ID to make sure that there will be a unified numbering system, and a catalog. And by virtue of that, meta data and tracking just in the ad space so in every ad and then not only did you have a catalog, you can access all different resolutions in a centralized place. So then if YouTube wants a a downsampled version, then you just pick the resolution you want. You don't take the raw and then encode it as well.
Tal Chalozin: 19:32 There's an initiative. There are several companies trying to do that. It's kind of a hurding cats type of an initiative. But it's almost a necessity because unless you do that, you will always have those artifacts.
Mark Donnigan: 19:46 Yeah, that's right. And that Ad ID in your experience does that travel, I'll use the word seamlessly, you know, between these various systems or is that even an issue of keeping that ad ID intact?
Tal Chalozin: 19:59 You know that it is a meta data but in reality again, we are one of the largest platforms that actually accesses files and stream them out and encode them. Most people that do encoding do not carry on all the meta data. That's one thing. Second thing is that most people, actually, most platforms don't even look into that meta data. So don't even expose that or do anything with it.
Tal Chalozin: 20:22 Several encoders do not put it in there. So right now, yes, it is there, but it's not fully available. So the solution that is used mostly right now, which you would laugh, is putting it in the actual file name. So literally as an unstructured text on the file before the dot and before you put an underscore and then the the actual file, which clearly doesn't carry through anywhere. So that's the reality again, right now in 2020. It's almost like Dror do you remember Yossi Vardi's example of pigeons carrying DVDs in order to transfer a lot of files, large files?
Dror Gill: 21:04 He also did another experiment. He took a snail and he stuck a USB drive on the back of the snail. And then he had two computers connected with a crossed ethernet cable and he was trying to see how the data will go faster through the cable or the snail that is moving slowly between the computers with the USB drive on his back. And I'm sorry to say, but the snail won!
Tal Chalozin: 21:28 The industry from the outside seems like, again, it all problems are solved, but it's far from it. You know, the Superbowl is coming up very soon and Fox is going to air the Superbowl and like every year you can access it in streaming as well. And it's still a discussion every year. Is the internet already for that? The term for ad serving in real time in the world of television is called DAI dynamic ad insertion. Every broadcaster that gets the right to stream the Superbowl is asking, are we ready or are we safe to do DAI for the ads or to play it safe are we gonna take the broadcast feed and then just retransmit? I Can tell you a funny story, that last year we did a really cool experiment.
Tal Chalozin: 22:19 CBS had the rights for the Superbowl and they use a system that takes the SCTE tone and converts it into an ID3 tag for digital systems. And then on the ID3 we put the marker of the ads, we put the actual Innovid URL of the the ad that is about to play. Originally the system was architected for measurement. So you can do measurements from the client side. So there is something on the client side, gate the ID3 tag and then fire that just do an HTTP get call that URL in order to track track the ads from the client in the most accurate way. But then what we did last year together with CBS is add the ability to also run overlays on top of the video.
Tal Chalozin: 23:09 So that URL was not just for measurement, but also downloaded graphics to be displayed as a kind of, as a transparent layer on top of that on the device itself. So if you stream live stream. This is not VOD or anything like that. You do live stream of the Superbowl. Last year many devices on CBS Sports had a small SDK that again, took the SCTE tone converted to an ID3 tag, get a URL for a PNG file or whatever that is rendered in near real time. And then every house on the United States gets something else. We did an experiment together with Pringles. The whole commercial was some type of a game with Pringles. So you would get a message that is tailored to you.
Tal Chalozin: 24:00 So, it literally featured the name of your city on it. And then it allows it to use your remote, let's say Apple TV. You can use your remote to left and right to swipe and play some, some kind of a funky game as the ad was playing. So funny thing again, this is 2019. You would imagine that we would have that technology available. This is not rocket science. We're talking about a lot more advanced things on the internet. But even that was super revolutionary and this year this capability will not be available because the way that Fox works is different. But that count is super cutting edge.
Mark Donnigan: 24:40 Now Tal, I know that you're working very closely with Roku, so why don't you share with us what you're doing with them.
Mark Donnigan: 24:49 Share what you can and tell us about what's happening on the Roku platform because I think that's very important to all of us in, in streaming media streaming video.
Tal Chalozin: 25:00 Roku is a streaming device. It is divided into two parts of their platform. One is a device a streaming stick and streaming box. But, Roku first and foremost is an operating system that runs on that device or licensed to TV manufacturers, to TV OEMs. And right now there's eleven OEMs that carries that. Anything from TCL, or Insignia, all the way to LG, and on some SKUs from Sharp as well. And by numbers, Roku is the largest television operating system right now in the United States. The most amount of TV's purchased in 2019 was Roku powered or TVs or streams were powered by Roku.
Tal Chalozin: 25:47 So this is larger than Amazon Fire, way way larger than Apple TV or Xbox or PlayStation or whatnot. So this is, this is Roku. Back in the early, early days of Roku this dating back to, to 2014 or 15, we did the first advertising oriented deal with Roku to create a small library and SDK that would be part of their firmware that many years later, the name is Roku ad framework, or RAF. Which is a set of libraries that lets app developers, Roku app developers get access to to stuff they need to run ads inside the app without a lot of work that allows us to create a technology for like, for example, interactive television, something that can be done in a very scalable way because now every app on Roku has the ability to render ads that can have overlays.
Tal Chalozin: 26:47 You can press the remote and you can purchase things or send things to your phone or whatever activity you would like. So this is the first thing we've done with Roku and enabled that technology at a mass scale. This is many, many years before Roku was a big success. But at the end of last year, in September we, together with Roku, we announced kind of the second, second act of the innovation on the future of television, which is around measurement. I mentioned at the beginning, the top of the, of the show that we have three parts to our platform, the ad server, which we talked a lot about, different tools around creative. And the third one would be measurement capabilities. On the measurement side this is an area that the television industry, we talked a lot about things that require innovation.
Tal Chalozin: 27:41 Measurement is maybe at the top of the list cause right now measurement on television is dominated by a company called Nielsen, which I'm sure many people know that the way they measure television because of lack of connectivity is by putting a people meter or a device in people's home. In very, very few households in the United States that act as a sample or as a panel which presumably should represent every household in the United States. So there's roughly 20,000 families in the United States that represent the television ecosystem, which there is north of 100 million households in the United States. And maybe 80 or 90 million households that are watching broadcast television and they're being paneled by 20,000 that essentially measuring what do people actually watch.
Tal Chalozin: 28:42 So, we want to change that. We, and many other important, an important point is that many other companies are, are at it. Because, it's obvious this needs to be changed. But we teamed up with Roku that every one of the devices that carries their operating system, so every one of those TVs that have Roku as an operating system have a small chip called ACR. Stands for automatic content recognition that essentially knows what you're watching. So it records everything that hits the glass. And it doesn't matter if it hits the glass because it's an app on the Roku platform, let's say Hulu or YouTube or Netflix, or you plugged in via HDMI, your set top box or you plugged in an antenna to to the TV or even you have a DVR or VHS plugged into your television.
Tal Chalozin: 29:32 Doesn't matter if it's rendered on the screen, then Roku would know what it is. They do a second by second or almost a frame by frame to a catalog. And then know what exactly you're watching and at what time code. We can talk about privacy as well, which is a very important part of it. But this is all opted in. You don't have to contribute this data, but most people do. And then we get this data. We don't care about the individual household, but we can use that as you don't, you don't need a panel anymore where every television is telling you what exactly you're watching. So we are, we're on a mission to reinvent that television measurement in a much better way.
Dror Gill: 30:15 That's really amazing. So the television is actually watching what you are watching. Even if it's not streamed through that Roku platform, it's watching everything that is projected to the screen and not only you know, like recording the pixels or they're actually using this automatic content recognition system. Analyzing and knowing what content, what piece of content this is, whether it's a live broadcast or a video on demand. It could be a DVD or a VHS, time shifted or it's an ad. Exactly.
Mark Donnigan: 30:51 Where is that fingerprint happening Tal?
Tal Chalozin: 31:01 And by the way, a disclaimer, I don't work for Roku and I don't know any internal data about Roku. We have a strong partnership with them. So Roku is unique technology. And by the way, other TV manufacturers are doing the same thing. This is not limited to Roku. Vizio who made a lot of noise around that as well. And many others, Sony and Toshiba and others. Are using similar technologies. What's on the device is mainly picking up multiple pixels, hashing it together and sending it to the cloud. The matching to the catalog is not happening on the device. There's clearly no need for that. And there are several companies that create this catalog and does essentially the pattern matching between the set of temporal data of that set of frames, consecutive frames to a catalog to know exactly what you're watching.
Tal Chalozin: 31:55 Is it - what show? What episode? Is it an ad? So one thing is to know the catalog. The other one is to know what is on right now in every... It's a very complicated problem, because sometimes you are you, you may be watching it live. Again, tuning into, I dunno, ABC, but right now because that show is a local show, you would watch it streamed by the Kansas city, Missouri ABC affiliate and it's not a national show. So you can't really match it to a catalog and know is it live or not live? And then when it comes to ads, it gets even more complicated because some of the ads are inserted in real time. So you need to know that that ad is inserted in real time so then it doesn't impact the idea of the stream. You didn't really change the channel. It's just dynamic insertion.
Dror Gill: 32:48 So doing all of this measurement, I think it probably puts a lot of responsibility on your part of the value chain on the software that you create, on the reports that you generate. Because based on this I guess is how the content providers get paid right. For showing those ads, as you said.
Tal Chalozin: 33:12 We are what is called the system of record for billing. So I mentioned that roughly a third of the ads are being transacted by us. This is a very rough number because the dollars don't go through us. We're just creating the billing. We are the actual counter of something like $5 billion of of ad dollars. So again, YouTube and Snapchat and New York times and NBC and Fox and TubiTV and many other channels and apps are being paid based on our numbers. And in order for that, we need to do a lot of filtration, detecting what is fraud, and making sure there's no false positives, and and many other things like that. And for it, we go through an audit process. So Ernst & Young is the auditor and there's an organization called the Media Rating Council that we go through an audit every year to make sure that what we say we do, we actually do.
Tal Chalozin: 34:12 And there's no there's no problems in the counting. And yeah, it happens all the time that we are counting, but also clearly broadcasters or apps would count for their own use as well. And sometimes, unfortunately, the numbers are not the same. So we would say that P&G ran 10 million ads and the broadcaster, NBC, Discovery, what have you, would say that actually it's 10 and a half million ads. So then they need to get paid more. But the way that the contract is written is that Innovid numbers because we're unbiased is what is what will dictate the payment. So you're like the gold standard in measurements. But it's a very interesting, a very interesting world.
Tal Chalozin: 35:08 It's an ever changing world. So counting ads 10 years ago and counting ads today is a very, very different business.
Mark Donnigan: 35:14 There's a lot of studies and I think you even have one that you can cite if you'd like to that say very clearly that consumers are not opposed to ads. This whole notion that people "hate ads" is actually not true. What they hate is a bad or an irrelevant experience. If the platform happens to know that I'm looking for a new car and I get served a great car ad, guess what? And especially if it piques my interest, that's actually a good experience.
Tal Chalozin: 35:48 100%. Yeah. We always use exactly the same term that you mentioned. People don't hate ads, they just hate bad ads. And that's absolutely true. And when you ask people, when you again, when you read the trades, it looks like ads are a very gloomy thing.
Tal Chalozin: 36:06 And then you go to platforms like, in my mind, Instagram is the best ad experience ever made. When you see ads on Instagram, it's significantly better. And it's not disruptive at all. You have your thumb there and you can continue scrolling. And then many, many people choose to actually watch that. So completely reverse model. It's not that I'm forced to watch the ad. I literally can continue scrolling the same way that I'm scrolling there. But people literally are choosing to watch that because it's good ads.
Mark Donnigan: 36:43 This has been a really amazing discussion and you know we have to do a part two. Yeah, there are few issues we did not cover and we must cover them and it's really been fascinating. Yeah, absolutely. Thanks for joining us Tal.
Tal Chalozin: 36:57 I'd love to, thank you so much. Thanks, Mark. Thanks Dror. Thanks everyone that listened. Thanks Beamr.
Announcer: 37:04 Thank you for listening to The Video Insiders podcast, a production of Beamr limited. To begin using Beamr's codecs today. Go to beamr.com/free to receive up to 100 hours of no cost HEVC and H.264 transcoding every month.
