A Venice company whose technology helps brands find their most passionate YouTube fans and incorporate their enthusiast videos into marketing campaigns has attracted $30 million in new funding.
Zefr attracted the fresh round of financing from a group of investors led by Institutional Venture Partners, a late-stage venture capital fund that previously backed Netflix, Snapchat and Twitter. The fund's general partner, Dennis Phelps, will join Zefr's board.
"The new investors believe it has the potential to be a billion-dollar business, and I believe that too," said Mark Terbeek, who led an early investment in the company.
Zefr cofounder Zach James said the infusion of capital will help the company bulk up its engineering staff and expand sales and marketing.
Zefr started distributing legally licensed film clips on YouTube. It discovered movie aficionados were uploading the same movie scenes, but attracting more views.
"We were like, are we threatened by this, or do we think this is totally awesome?" said James.
Zefr began using its technology to identify the film clips on behalf of the Hollywood studios, which could choose to give Google Inc.'s YouTube permission to sell advertising against the videos -- producing a fresh source of digital revenue for the studios.
James said the company began to apply its expertise to help brands like Adidas manage their YouTube presence.
Brands typically underestimate their presence on the sprawling online video site. When asked about how much notice they attract on YouTube, brands frequently cite the video views on their own channels.
"We'll run the analysis ... and we consistently get back 90% percent of the total presence is actually views [of videos] uploaded by their fans," James said.
One cosmetics company thought it had garnered just 700,000 views of a commercial it ran on YouTube. A Zefr analysis revealed 7.7 million people had watched user-created videos about the product -- including some demonstrating how to apply the makeup to achieve the same look as the celebrity in the commercial, James said.
Michael Holz, interactive strategy director at Wieden + Kennedy said the ad agency uses Zefr's technology to get a truer picture of how content is performing on YouTube, identify a brand's fans and monitor what competitors are doing.
"We also have plans to start increasing our dialog with commenters to build a stronger presence between campaigns," Holz said in an email. "It's a pretty robust offering and I feel like we've found some really tasty nuggets to work with while only scratching the surface of what Zefr can really offer."