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FreeWheel’s Trillion Milestone Marks Growth of On-Demand Ad Impressions

FreeWheel, the technology company that helped enable the growth of premium video on demand, has reached two important milestones. It recently turned 10 years old and it served up its 1 trillionth ad impression.

Even in the TV work, a trillion is a big number—almost big enough for FreeWheel to stop and take notice.

“We’re always sort of nose to the grindstone,” co-CEO Jon Heller, who cofounded FreeWheel along with Dian Yu and Doug Knopper, told B&C. “The only reason I knew it was imminent was we had a betting pool. And it happened right on the company’s birthday. It was amusingly fortuitous.”

The founders admit that ad tech by itself isn’t all that sexy. But without a system like FreeWheel’s, it might be impossible for consumers to access all the content that’s now available to them or for advertisers to reach the kind of mass audiences they need.

“People still want to watch TV and they want to watch more and more of it, so we’d always been positioned as the champions of empowerment of the traditional television industry,” Heller said.

Fixing a Piracy Problem

Heller said he knew there was a need for FreeWheel when, years ago, he was watching an unauthorized stream of Star Wars: The Clone Wars on a big TV hooked up to a Macintosh. The pirate feed contained ads from three different ad networks, something that had to alarm the rightful owners of the show.

Being able to safely manage and distribute content was “a really thorny and painful problem,” he said. Getting to 1 trillion impressions is a testament to FreeWheel’s solution. “Without these things being automated, you can’t put your library up, you can’t put it in front of people and nobody could watch it.”

Yu said the “significant milestone of achieving 1 trillion impressions on our 10th anniversary is a testament to marketers’ increased adoption of premium video as a channel for the delivery of their advertising messages to highly engaged audiences across all screens and to FreeWheel’s position at the center of the new TV economy.”

Selling the system to programmers and distributors was surprisingly easy, the founders said. FreeWheel named its early product Monetization Rights Management, because that emphasized revenue generation. A system emphasizing Digital Rights Management would focus on restricting distribution, Heller said.

Turner was an early client. Freewheel currently represents AOL, DirecTV, Fox, NBCUniversal and Viacom in the U.S. Internationally, it handles MTG, Sky, Canal Plus and Channel 4.

These days, content is available on multiple platforms and viewable on many devices. Early on, FreeWheel made a technical decision that enabled it to grow with that development.

“We made one very smart architectural call,” Heller said. “We completely abstracted the viewing endpoint from everything else, so it’s one decision engine that’s smart enough to know you’re in a set-top box VOD environment so I can only choose from ads that are in your headend. Or, if you’re on an Apple phone, I can do it a little bit differently, but it still uses the same thinking.”

To do that, the company had to build separate programs for different endpoints, which total more than 220 now.

“The endpoint integration has changed a lot since we started FreeWheel,” Yu said. “I remember Flash Ad Manager was the most popular and carried the most ad impressions. It’s nowhere to be seen and retired. So over the years, we actually have added on a lot more integration. [But] adding new integrations never impacted our core decision engine, which allowed us to move much faster.”

Keeping up with both industry growth and technological change pushed FreeWheel to sell to Comcast for $320 million in 2014.

“Doing what we’re doing at the size we’re doing it is a lot of R&D,” Heller said. “Before we joined Comcast, we were 200 folks with maybe 100 engineers. Now we’re 700 folks with over 400 engineers. So it’s a very technically hard problem and you have to invent things that people didn’t know they wanted and have them by the time they figure out they want it.”

R&D is expensive, Heller said, and “you can’t raise [money] forever because your investors need a liquidity event. If we had gone public, we wouldn’t have been able to continue that kind of R&D pace. So going private made the most sense.”

FreeWheel now has 130 employees overseas, including 300 employees in its Beijing office, which houses its engineering operations. The company said it has found ways to coordinate the activities of engineers working in its far-flung offices.

Strategic Fit in Comcast

FreeWheel’s interests align nicely with Comcast because both companies aim to make the existing TV ecosystem more valuable, which helps Comcast’s cable business and the NBCUniversal networks.

“The most exciting thing about our journey is that we’re part of a larger organization that has tremendous potential in the advanced advertising space and more specifically, merging the best of digital with the best of TV,” he said. “There’s more to come, and we’re excited about playing a role in helping Comcast be in a position to deliver targeted TV and VOD ads with the right message, to the right viewer, at the right time.”

FreeWheel aims to continue to grow by doing more work with linear broadcasts and live events.

“We started out with the World Cup pretty early on. It was 2010. We were in Beijing at an expat bar filled with a bunch of Germans and Brits. And Germany and England and the U.S. were still in it. And every time a goal scored, a bunch of people in the bar would get up and go, ‘Yay!’ And then when we saw an ad delivered, we would go yay. People looked at us a little funny.”

In February, FreeWheel handled ad insertion for the Super Bowl stream using its newest technology, HyLDA, which stands for Hybrid Linear Digital Ad Scheduler. The company calls HyLDA a bridge between digital environments and traditional linear television.

“Complacency has never been in our DNA,” Knopper said. “The problems we are solving for today are even bigger than when we started the company. Our customers are not sitting still—they are demanding more in response to an increasingly demanding market.”

“Staying ahead of the curve is the only option,” he added. “Our customers require more from us every day, and we will continue to deliver on our commitment to enable them to maintain the rights and ability to monetize their television content wherever it appears.”