F-U-N-D-E-D: Disney ups investments in mind-reading tech

Ever text on your smartphone while watching YouTube videos on your laptop? Scan a viral cat video from your iPad while perusing Netflix on your Roku?

You wouldn't be the first. Few people actually focus on the videos they watch online. That might even be for the best. What would it say about us if we gave our complete attention to cat GIFs on Twitter, Chuck Norris memes on Imgur or dancing babies on Vine?

But distraction, it turns out, is bad for advertisers. An AOL-commissioned study by global marketing firm Nielsen last year confirmed as much, finding that "distracted video viewing dramatically impacts advertising effectiveness." Such results just might explain why the Walt Disney Co. keeps investing in technology to get inside people's heads.

Last week, Disney's accelerator along with Javelin Venture Partners and MESA Venture invested $3 million in startup FEM Inc. Its team of ex-Googlers and a Caltech neuro-economist have developed the Prizma video platform that uses brain science to pick videos that viewers will really want to watch. The company says 30 percent of those watching a video on its Prizma platform return within a week to watch more videos.

And that's just Disney's latest move to fund a neuro-tech company. In July, as covered by CNET, the company's accelerator gave $120,000 to FEM and another $120,000 to Emotiv, a brain science startup that says it can "track mental performance, monitor emotions and control virtual objects with thoughts."

But Disney's recent investments are part of a broader trend. In an era of digital distractions, media and advertising companies are exploring brain science as a tool to fix people's eyeballs on their content -- and ads.

Take Nielsen, which has been aggressively exploring brain science since 2011. Market research firm SharpBrains reckons Nielsen holds the most valuable collection of patents for types of brain-reading tech. In May 2014, for example, Nielsen bought neuroscience research firm Innerscope Research, which claims its technology "measures and analyzes moment-by-moment conscious and non-conscious responses to media and packaging, providing marketers with critical insight into consumers' decision making."

In March, Boston-based Cortex raised $500,000 from angel investors. Cortex helps brands such as Hulu and retailer TJX Cos. (which owns Marshalls and TJ Maxx) pick the best content for their websites. Cortex uses artificial intelligence to "learn" a brand's media needs, and then tells it what and when to post for maximum benefit.

Jim Nail, an analyst at research firm Forrester, believes the appeal of brain science for media and ad giants makes sense.

"Their job is to attract an audience for a long enough period that you can insert advertising in that time span," Nail said. "I think a tool like [FEM] would give them some very good insights about what keeps people's interest beyond six seconds."

That's because these brain-researching startups "will look second by second at what is going on" inside your head, Nail said. "They can see the face of a person people really respond to, or the part [of a video] that is boring. It becomes a tool to make the messages much more powerful and connect with people in a much stronger way."

After all, who can really concentrate on another ad for Geico playing in between YouTube clips when they're also watching a live stream of a concert on Twitter?

Probably no one.

NeuroSpire CEO Jack Stauch says today's brain-reading technology doesn't "get granular about [our] emotions." But NeuroSpire's software, which analyzes people's neural reactions to content, does measure emotional engagement -- or in biz terms, how your brain looks at ads. Marketers use that insight to redesign their ads.

But what if advertisers get too good at knowing the human mind?

Rachel Payne, co-founder and CEO of FEM, says she's taking a different tack. If FEM perfects the science of online viewing, the result may be that people get content worth their time.

"It might not lead to everyone constantly watching videos," said Payne. "But it may lead to people not being frustrated."

F-U-N-D-E-D is a regular column looking -- and sometimes laughing -- at what Silicon Valley has backed in the last week.