VideoEgg Hatches Permissioned Video Ad Network
Video is big on the Internet, and particularly consumer-generated video. But so far, agreement over how to profit from it through advertising is not. A comScore study out last week showed that 106 million people, or about three-fifths of the U.S. Internet audience, streamed some kind of video in July. Most of that activity occurred on sites that have not as yet found a way to monetize their popularity with ads—although MySpace and YouTube, the top sites behind the Yahoo! Network, are looking for those solutions.
Video hosting platform VideoEgg may have come up with one part of the answer: permission-based ads that advertisers don’t pay for until a user sees them.
The company has been in existence for about a year, making it a few months younger than Web video phenom YouTube. VideoEgg.com host video on its servers and delivers it to other Web sites, as well as to any digital device. And VideoEgg recently unveiled partnerships to add video features to a host of social networking sites. Users of the Bebo, Hi5, Dogster, Current.tv, AOL and Tagged networks will be able to upload their own video to those networks and to view it easily, since VideoEgg’s technology uses a Flash-based plug-in rather than a software-based player such as Windows Media or QuickTime.
“The company began with a laser focus on making it simple for the everyday end user to get the video they shoot off their devices and onto the Web,” says co-founder Kevin Sladek. That was VideoEgg Publisher. The company then began rolling its capabilities out to Web sites that wanted to let users view and post video but didn’t want to invest in the infrastructure or incur the running costs that video can run up: social networks like Bebo, but also verticals such as Edmunds’ CarSpace.com and enthusiast site Consumating.com—some 60 sites in all, with a reported 10 to 20 million impressions a day.
“Our model has always been a partnership model, so we developed a platform, resources and infrastructure that we can use to power sites looking to make video posting, sharing and watching real easy for their constituents,” Sladek says. That sets VideoEgg apart from those video sites aiming for destination status; the company would rather work behind the scenes and provide a white-label video service to others than spend time building traffic to its own site.
With its most recent announcement, VideoEgg is now offering to host and deliver video ads, should those sites choose to offer them. But the ads won’t be in the usual format of pre-roll or post-roll– that is, ads before or after a clip that a viewer must watch.
“We’re looking at a short-form viewing environment that’s different from anything we’ve seen before,” says VideoEgg CMO Troy Young. “Users consume a range of content serially here, from very personal videos to segments of news content to music videos. In this environment, pre-roll is not the solution, because it creates a lousy viewing experience and you won’t get the response.”
Instead, when a user is watching video hosted on the VideoEgg platform, the company can use one of several ways to suggest other video content that might be of interest—including sponsored video, i.e. advertising, clearly marked as such. These suggestions can be displayed either as an “ad ticker” at the bottom of a video the user has downloaded, or as an “end-cap” still-frame shot that invites users to click through. In both these instances, advertisers will not pay unless users click through to play the video ads.
VideoEgg will offer a third more traditional ad option: a persistent message at the bottom of a video and then a 15- or 30-second spot at the end of the video. This product will be priced per impression rather than per clickthrough.
Young says video could be a natural ad medium for many Web sites—provided marketers can get away from the tight 30-second commercial format they’ve learned on TV and adapt their message to the looser, more handheld and edgier environment of online video.
And of course, marketers who advertise on video content sites will face the same content risks as those placing ads on blogs or social networks. Young says that human editors at VideoEgg will vet the videos against which ads are to be served, to make sure that they suit the advertisers’ stated wishes and don’t contain copyrighted or too-controversial material.
“Every video in our network is reviewed by real people,” Young says. “We have a team of people and proprietary software that allows us to go through and inspect video at real velocity. “
But video may turn out to be only one option for mounting advertising on the Web via VideoEgg’s platform. Young points out that the Flash player is also well suited to delivering ads through online games, and can deliver sponsored informational content on everything from health to car repair through short Flash movies.
Finally, the VideoEgg platform could be integrated into transactions over the Internet. “Since we’re just delivering the Flash application, there’s no reason we couldn’t be used to deliver the front end of a credit-card application or flight-booking widget,” Young says.
Other video distribution platforms specialize in copyright content such as movies and news, but VideoEgg is concentrating its expansion efforts on Web sites that offer consumer-generated media. These are the sites that can least afford their own video hosting, and the sites with the greatest interest in monetizing through video ads.
“Moving video content on the scale that a social network would need to is incredibly daunting,” Sladek says. “On our busiest day, we’ve pushed 6 gigabits of feed throughput; that’s 1% of the total domestic Internet throughput of 600 gigabits. And when you look at what it takes to pay for that, monetization is a must. The best solution in the world is still many orders of magnitude more expensive than pushing tags or photos.
“And for us, this is where the business is going. Eventually, the technology will commoditize, and we’ll lose our early lead there. But the advertising game never stops, and we’ll have a head start there.”
