This story was provided to us by our content partner VCCircle.

When Google (NSDQ: GOOG), the world’s largest online ad network, itself is finding it difficult to monetise its $1.6-billion YouTube (we are not saying that, Larry Page is), an idea like an online video advertising network can be a bit challenging one. Not for India-born Diaz Nesamoney, the founder and CEO of Jivox, who recently landed a series A funding of $10.7 million from Opus Capital, a US based early-stage venture capital firm, and Helion Venture Partners (which has also funded Komli ad network). This is besides the $2.7 million it raised in a seed round from Opus Capital earlier this year. Jivox’s business model is to become a platform for small businesses to create video ads cost-effectively and distribute those across the web publishers. Simply put, Jivox is for video ads what Google AdWords is for text ads. Jivox also helps companies create ads, hence cutting their costs and access to creative tools. The idea sounds good, and a few VC firms have bought into it. Jivox has aggressive plans for India, while the US is like its home market. Its clients in India include Rajshri.com, Sulekha.com, AOL (NYSE: TWX) India, SantaBanta.com and EROS.
Nesamoney, a BITS Pilani alumnus, is an experienced entrepreneur as he has served as co-founders of software companies Informatica Corporation and Viewceler in the US, and has raised several round of venture capital for these firms. VCCircle’s Shrija Agrawal spoke to Nesamoney on what is next for Jivox. Excerpts:

Q:What is the idea behind Jivox and how does it work?
Diaz Nesamoney: Jivox was founded in late 2006 and the idea behind Jivox was to tap into the emerging market of online video advertising. We saw an opportunity as small businesses were looking beyond online display advertising and banner ads to videos which is a much broader format. At Jivox, we create video advertisements and place them on relevant publishing sites. Online video advertising is one of the fastest growing segments of digital marketing.

Q: What opportunities do you see in the online video advertising market in India? How big is the market for it in India?
DN: The US market is a much larger market than the Indian market. The number of broadband internet users in India are less, at about 3.5 million. But what is interesting about the Indian market is the growth rate. It is increasing at 100 percent year-on-year basis which means if we continue having this kind of numbers, India can become as large or larger than the US market. We saw the same thing in the growth pattern of mobile phones in India which initially had small numbers but have now grown to become the largest in the world. This is why we are making a bet on Indian markets especially with the cost of PCs and laptops going down in India.

Q: Have you managed to clock revenues till now?
DN: Yes, we are generating revenues both in India and the US. We would not like to reveal our revenues but we are confident that we expect to have over 40 premier advertisers and over 25 top India-based publishers by the end of our first year of operations.

Q: Who are your clients in India?
DN: Our clients in India are some of the larger advertisers. We have worked with firms like Bharatmatrimony.com, Rajshri.com (bollywood portal). In terms of our publisher network – it includes over 20 million unique visitors per month – and includes (but is not limited to) Rajshri.com, Sulekha.com, AOL India, Santabanta.com and EROS. Currently, we would prefer not to mention specific names of advertisers, but can confirm that they are in the areas of matrimonial services, banking and financial services (money transfers to India in particular) and travel.

Q: What is your business model?
DN: We charge the advertiser to place the ads and we place the ads with the publisher sites and we also have a revenue sharing model with our publishing sites.

Q: Where do you plan to use the money that you have raised?
DN: We expect to grow ad sales in India, also expect to grow our product development team in Bangalore. We currently have a team of about 30 people and we wish to increase it to 50 people. We are also open to the idea of looking at acquiring companies which offer similar technology services.

Q: What are your expansion plans?
DN: We have had very good success in India till now. We are betting on the growth in internet in India. We will be looking at mobile, other forms of digital advertising and ultimately reach where the consumer is. There are a lot of users and we see enough opportunity.

Q: India is a different market to operate in when it comes to online businesses. There are several broadband regulations to cope up with, right?
DN: Not as much as we are facing here in the U.S. We have limitations here
also from a broadband regulation point of view. As with most businesses online, we have to take that on our stride and comply with it.

Q: Considering that sites like YouTube are not making money, how bullish
are you on Jivox?
DN: A big problem with YouTube is that it has all user-generated content, home videos and not so professionally made videos. In our case, all our publishers have created their content professionally. We have high quality publishers and not user-generated. YouTube faces
challenge in terms of monetising the user-generated content.

Q: Google is also operating in the video advertising space through adsense-videos. How do you plan to compete with them?
DN: Google Adsense is an ad network only, and not a service for businesses to create and place videos. Unlike text ads (Adwords), video ads are very difficult and expensive to create. We have simplified the process and made it accessible to all advertisers - big or small. As a result, we see Google and other ad networks as partners and in fact plan to use Google and other networks to distribute our video ads.

Q: Are you trying to fill in a gap in Google’s portfolio? Will you also consider an eventual sell out to Google?
DN: Our product has been live and in production since March 10, 2008. We just plan to build a large successful company.