Cloudinary acquisition signals the growth of video in digital engagement

Phil Wainewright Profile picture for user pwainewright January 17, 2022 Audio mode
Summary:
Visual engagement platform Cloudinary adds automated video ad creation with Indivio acquisition, looks to further innovation as ARR crosses $100m

Cloudinary founders (l-r) Nadav Soferman, CPO, Itai Lahan, CEO, Tal Lev-Ami, CTO
Co-founders (l-r) Nadav Soferman, Itai Lahan, Tal Lev-Ami (Cloudinary)

Visual media are becoming increasingly important in the realm of digital engagement. The prior history of computing has been largely text-based, but now that former constraints on processing power, bandwidth and storage are falling away, it's become a lot easier to harness the immediacy of images and video to convey information and build engagement. Moving images and video are more and more common in social media and on online, while YouTube-style how-to videos are becoming a staple resource for customer service teams.

There's plenty more innovation on its way, according to Itai Lahan, CEO of media experience platform Cloudinary, among whose 9,000 customers, brands such as Nike and Adidas are pushing the envelope of what can be achieved. But it's been a long time coming, and much of the market is still catching up, as he explains:

When we started Cloudinary in 2011 ... we were looking for the market to catch up because, hey, there's so much to do with video ... 2015 was the first time that we saw some leadership from our customers that are saying, 'Oh wait, we need that Cloudinary for video, yes we are doing this.' It got us to really put tremendous effort on video, making video successful.

We're still looking for the market to catch up so we can talk about AR/VR, about 3D — incredible things that we're working with some of our customers on how do you utilise 3D in a web browser to engage — or talk about AI. But the market is so far behind, we're still in the educational phase on, 'Use videos'.

In the meantime, there's been plenty to do just helping customers manage online images, where Cloudinary has built its market presence by providing an API-first Digital Asset Management (DAM) system. Its success has now driven annual recurring revenue (ARR) past the $100 million-a-year milestone as of last month — an impressive achievement for an entirely bootstrapped business that has never taken external funding.

Cloudinary acquires Indivio

Last week saw a further move into video. Cloudinary announced its first-ever acquisition, buying Indivio, a tool that automates the creation of eye-catching video collages for social media ad campaigns. These are based on dynamic templates that capture content from a variety of image sources and data feeds, and use rules-based customization to rapidly create and publish campaigns personalized to specific audiences. AI-powered analytics monitor performance and allow for fine-tuning of campaigns in flight. Cloudinary plans to integrate Indivio's technology to support video creative automation within its own platform, while continuing to support its existing integrations to Adobe and other tools.

As we learned when we first spoke to Cloudinary last year, the pandemic has been an important driver of the rising interest in visual engagement. That's been particularly true for video, as Lahan explains:

Because of the pandemic, companies are looking for new ways to interact with customers — obviously videos! We can talk about mobile applications and the growth in user generated content and what is that? It's videos. You need to create that visual engagement with your customers.

JPEG XL and taking a long view

But that's not to say static images are going away. On the contrary, there's proven to be more scope for innovation than seemed possible back in 2011, prior to the company's foundation a year later. Lahan explains:

We said ... we're going to start with images really quickly, because it's simple. We'll solve images and then go to the more challenging problem, which is video — obviously, famous last words. Images are incredibly complex. It's so deceptively simple that people do not understand just the value on one end and how complicated it is to get it. We're still there in this journey.

One recent innovation is an update to the 30-year old JPEG image file format. A new royalty-free format called JPEG XL, jointly developed by Cloudinary, Google and JPEG, was formally standardized in October last year, although it is not widely supported as yet. It has been designed to provide better image quality at low bandwidth than legacy JPEG. Other innovations include the use of AI to automatically retouch images, for example, to instantly dress a model in a different outfit or change a background. The use of blockchain to authenticate media ownership is another area Cloudinary is watching closely.

Without outside funding, Cloudinary is free to take more of a long-term view as it waits for these and other innovations to gain market acceptance. Meanwhile, its API-first, MACH-compliant architecture means that it's a preferred choice for businesses that want to be innovation leaders, which gives it valuable insight into what's coming next, as Saranya Babu, CMO, explains:

You're not restricted to any UX, or any of those constraints, which really attracts those kind of trailblazers, the most advanced type of users. The people that are cutting edge, they're able to come in, and then they show us the way.

Because of that self-serve product that we've built, we're basically seeing what the most advanced customers are doing, the latest trends — customers are leading that. What we do is simply through these type of reports, surface that and then use that to educate the market and see what the leaders are doing.

My take

In my review of 2021, I said that I'd be writing about visual data early in 2022. I've yet to write the piece I had in mind then, but Cloudinary's acquisition of Indivio is a further reminder of the growing importance of visual media in digital engagement. Indeed, anyone who's been paying attention to diginomica's own social media feeds will have noticed that we ourselves have upped our visual game, thanks to the talents of our newest team member. The technology has now reached a point where we can all make a break with computing's text-based legacy and unleash a great deal more creativity to help communicate, inform and engage in natural media such as audio and video. I'm sure there will be much more to see in 2022.

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