ZEFR acquires Pipewave, moves toward serving both brands and content owners on YouTube

By Michael Carney , written on January 7, 2013

From The News Desk

ZEFR, a company we’ve long known as MovieClips and as the definitive provider of content rights management for Hollywood studios on YouTube, is looking to spread its wings. The three year old Los angeles startup that's already serving more than 1 billion video views per month has recently hinted at expansion into additional categories including TV, music, and sports. But it appears the bigger vision is to offer a wider array of services to its customers across all of these categories. Today, the company is taking the first step in assembling its “end-to-end solution” with the acquisition of stealthy in-stream video advertising optimization startup Pipewave. The company declined to specify details of the transaction.

Pipewave was founded in 2011 by Harvard MBAs Paul Boruta and Jonathan Tushman, its CEO and CTO respectively. The pair, who have been largely bootstrapped and never expanded their team, built a VAST-compliant (IAB Digital Video Ad Serving Technology) ad serving and optimization platform certified on 15 major networks, including YouTube and Google Display Network, for US and global campaigns.

The platform enables video advertisers to optimize between multiple different pieces of creative content in real-time. For example, if a brand has four different 15 second video ads, Pipewave uses multivariate demographic analysis to push the ideal piece of content to each viewer, all within YouTube’s walled-garden or that of another video network. Additionally, via its “Sequential Storyboarding” technology, the startup promises that the same piece of creative content will not be served repeatedly to the same user across its multiple networks.

ZEFR co-founder Zach James recalls the moment he first heard about Pipewave’s technology and team, which had by then developed a reputation as, “the smartest way to buy on YouTube.” Realizing that not much ad-tech exists for YouTube, he thought to himself, “Holy hell, I need to move on this fast!”

In what appears to be equal parts a talent and technology acquisition, Pipewave will continue to serve its existing list of media and entertainment clients, including Electus, and OkCupid sister company PeopleMedia, and other major content publishers and agencies. Add in ZEFR’s existing 14 person sales force, and the product is likely to grow even faster than it has to date. At the same time, Pipewave’s technology will be incorporated into ZEFR’s forthcoming “Brand ID” offering, which aims to deliver brand monitoring, sentiment analysis, and messaging alongside the company’s existing YouTube “Content ID” offering.

Boruta and Tushman have grown Pipewave over the last two years living on separate coasts, with the CEO in Los Angeles and the CTO in Boston. ZEFR won’t change this, opening a Boston Technology office to focus on further advertising and marketing product innovation – and to tap into the talent pipeline coming out of MIT, Harvard, and other area universities. Boruta, who previously ran a 25-person optimization team at Yahoo around the time of its Overture acquisition, will grow his own LA-based team as ZEFR’s new head of media optimization (a title that’s still being finalized).

In addition to the Pipewave acquisition, ZEFR has been rapidly expanding its own internal engineering team following its August $18.5 million Series C financing from U.S. Venture Partners, MK Capital, Shasta Ventures, SoftTech VC, First Round Capital, and Richmond Park Partners. The company hired former Google and Zynga recruiter Rebecca Stillman in September, and apparently hired seven out-of-town engineers in the last seven weeks of 2012 – an impressive feat for a Los Angeles company of slightly more than 100 employees.

With Pipewave under its product umbrella, James looks forward to telling premium content owners and brand advertisers alike, “We can find and claim premium content on YouTube, make sure its clean and brand safe, and now optimize the creative and media spend around it.” Through the acquisition and the subsequent targeting brands, ZEFR has doubled its product offering and, more importantly, its target customer audience

It's notoriously difficult to penetrate exactly what and how each ad-tech offering works. This makes it equally difficult to separate the deserved superlatives from the marketing hype. But the speed with which James moved toward an acquisition, completing the transacting in less than three months after meeting Pipewave and allegedly never considering a vendor relationship, speaks to his opinion of the product and its founders. Similarly, the ability of this tiny team to bag the business of companies like Electus indicates that it’s more than just a compelling story.

[Check out the video from our Office Crashers visit to ZEFR HQ earlier this year]