Startup Success: Virool Makes Millions Offering DIY YouTube Ad Campaigns

After shifting its focus from big brands to small businesses, Virool's earnings skyrocketed.
Content Creator/Speaker/Consultant, Alpha Dogs Media Group
May 22, 2013

A few years ago, your extremely clever, creative, heavily-promoted YouTube video had a decent chance of going viral. Today, not so much. Now, you’re competing with more than 120 million YouTube videos, only 5 percent of which get more than 1,000 views. So unless you are Old Spice or Grumpy Cat, or you can afford a big-bucks social media campaign, you may find yourself at the bottom of the heap for views.

Alex Debelov, a co-founder of Virool, thinks he has a solution to your problem. Virool, essentially an advertising platform for video, has a proprietary technology that distributes videos and encourages user engagement through a network of blogs, social games and mobile apps.

Launching with Big Brands

Debelov and his co-founder, Vlad Gurgov, both originally from Russia, started Virool at the end of 2011 with the intention of selling their service to big brands and working through large social media agencies like Big Fuel. Three months into the company’s first big project, with General Motors, “I received a call from a social media advertising company that was interested in buying us,” Debelov says. “I realized we were onto something big.” He and Gurgov moved from St. Petersburg, Russia to Silicon Valley. Things began to move quickly and Virool landed clients like Havaianas, Clorox and Banana Republic. The company was also accepted into YCombinator in the beginning of 2012.

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At that time, the founders began receiving an increasing number of emails from potential customers wanting to run very small campaigns. So why would Virool consider that market when the company had already established credibility with large brands? “Selling to brands or agencies is a lengthy process with lots of people involved,” Debelov says. “We realized that in order to grow, we’d have to hire a lot of sales people.” Through YCombinator, the partners began to shift their business model toward a self-serve platform for smaller campaigns.

Big Shift, Small Clients

“We saw an opportunity in a market that no one else was serving,” Debelov says. Between March and August 2012, Virool’s monthly earnings skyrocketed from $30,000 to $300,000. “Our competition was charging $100,000 to start a video campaign and with us, you could get started for $10,” he says. Customers create an account on Virool, upload the YouTube video they want to promote along with any relevant links, plug in the demographics of the audience they want to reach and set a budget. The average cost of a campaign is approximately $400. While Debelov says that Virool is attracting a wide variety of users, the company’s most promising vertical markets are small businesses, musicians, game developers and film studios. Virool now launches 150 video campaigns a day, and they run the gamut from fundraising campaigns after the Boston bombing, to job seekers pitching their quirky skills, to Indie bands promoting new music, to a low-tech animator whose campaign landed him an MTV gig.

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While customers tend to measure success by the number of views a video receives, Debelov says that the end goal for Virool is to drive more interaction between its clients and their customers after the video is seen. For example, after watching a film trailer, Virool might track the viewers who post a link on Facebook, and then share that information with a film studio that might then remind the viewer of the film’s premier with a banner ad.

The Platform Evolves

Even though Virool stopped focusing on big brands, Debelov says that many large companies are now knocking on his door. “They come to us now and we’re sending out three to four RFPs a week,” he says. For example, Virool recently ran a large campaign for Intel. Still, 60 percent of the company’s revenue comes from its self-serve platform. And those revenues are substantial. They were $2.5 million last year and Debelov predicts $11 million for this year.

In February, Virool landed a huge “seed” round of $6.6 million from a variety of investors, including 500 Startups, Menlo Ventures, FundersClub, YCombinator’s Paul Buchheit, and Lady Gaga’s manager Troy Carter. Virool can use some of that money to bankroll a highly unusual incentive for its 11 employees. Next year, says Debelov, Virool will choose an employee who has brought the most value to the company, and reward him or her with a vacation that’s truly out of this world—a seat on one of Virgin Galactic’s first space tourism flights. “We wanted to attract the best talent,” Debelov says. “So we’re offering a perk that no one else has.”

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Photos: Courtesy of Virool