Satellite TV Provider DirecTV Makes Strategic Investment In Video Ad Startup FreeWheel

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Video ad company FreeWheel is announcing this morning a big new client, which is also making a strategic investment in the firm. Satellite TV provider DirecTV has chosen the startup to improve monetization on new digital platforms, and has taken an equity stake in FreeWheel to help make it happen.

Cable, satellite, and telco TV providers are making investments in their TV Everywhere services, with an eye toward making the same type of content viewers watch on TV available on a wide range of new mobile, tablet, and connected TV devices. But once they’ve decided to do so, they’re faced with how to deliver it, and even more importantly, how to monetize it. That’s where companies like FreeWheel come in.

FreeWheel provides a platform for dynamic ad insertion in on-demand and (especially) live video feeds online, allowing pay TV providers and other streaming providers to make money off their digital assets. Over the years, the startup has been tapped by a number of large partners to handle in-stream monetization, including AOL, ESPN, FOX, NBC Universal, Sky, Turner, and VEVO. The commercial partnership it’s struck with DirecTV adds just one more big name to that list.

As DirecTV seeks to make more shows available online to its subscribers, monetizing that content and making sure that the right people get paid will be vitally important. More than just putting the same TV shows online, the satellite TV provider is seeking to add an incremental revenue stream through advertising against that digital content.

To do so, it will be leveraging FreeWheel in the deployment of its online properties. In addition to ad insertion, DirecTV will be using the company’s monetization rights management technology, according to FreeWheel co-founder Doug Knopper. That will allow DirecTV to manage ad sales and delivery with its content partners, to ensure that the right ads are delivered and the right content providers are compensated for monetization that happens against their streamed shows.

As for the investment — FreeWheel is no stranger to taking strategic money from media companies and their venture arms. Previous investors include Turner Broadcasting and Disney investment arm Steamboat Ventures. The company has announced two prior rounds of funding, adding up to about $30 million, with other investors including Battery Ventures and Foundation Capital.

Terms of the deal were not disclosed, but Knopper told me that strategic investments like the one DirecTV is making provide the company with contacts to help get deals in place, but also gives it learning and insight into how its partners — and the overall industry — are changing their thinking about digital distribution and monetization. As DirecTV seeks to make even more of its content available digitally, that’s valuable knowledge that can be applied to their commercial relationship.