VideoEgg

Advertising.com has announced the launch of their "performance video product" today. The AdLearn system will allow advertisers to spend ad dollars on in-video ad formats and pre-roll placements.

What makes this product unique is that advertisers will be charged on a cost-per-click basis but publishers will be paid on a cost-per-thousand (CPM) basis. No details were provided on how this conversion will work though doing some basic math on my pad says that Advertising.com stands to benefit more than the publisher.

Advertising.com explains, "The new cost-per-click offering employs a 5 to 9 second video or flash creative asset and is streamed within an in-player video environment. This product lays the future framework and foundation for advanced video targeting, new advertising overlays, and additional performance measurement tools within all video players."

This seems like a rush-to-market after the launch of AdFrames by VideoEgg last month. AdFrames uses engagement for pricing and the ads also expand past the normal frame of the video player.

Michael Learmonth at SAI has an email that VideoEgg has sent to its video hosting customers. VideoEgg is providing 90 days to remove client videos to a new host and the platform will be officially disconnected on May 31.

Snippit from the email, "As you know, over the past twelve months, VideoEgg has become a leading video advertising network. We have decided to focus on video and rich media monetization technologies, and therefore are no longer investing in the video platform side of the business. We are trying to consolidate our relationships with profitable large partners and continue our focus on creating higher value ad solutions for brand advertisers."

The writing has been on the wall with the shift to a video ad network for quite a long time now. When we met with CMO Troy Young is September the entire discussion was focused around the ad network. Then VideoEgg began to support the Meebo platform, extended video ad reach by 50 million and most recently the shift to engagement advertising with AdFrames.

This afternoon VideoEgg held an event named "The Engagement Debate '08" in NYC. They did a good job of not letting the panelists run infomercials for the companies and actually discuss the topic at hand. I grabbed a quick video that I thought might be worth a discussion.

The first panel looked at how you define digital engagement and I have posted the video below for the question "In My Job, Engagement Means..." and so I ask you, how do you complete the statement? This applies to both startups and those at large companies - feel free to post anonymously.

The panel from left to right were:

• Rob Norman, CEO GroupM (he sure does have a lot of Jewish "jokes")
• Jean-Philippe Maheu, Chief Digital Officer, Ogilvy North America
• Nada Stirratt, EVP Digital Advertising, MTV Networks
• Mike Hudack, CEO, Blip.tv
• Mike Steib, Director TV Ads, Google

Last year when I sat down with VideoEgg CMO Troy Young, one of the items we discussed was metrics for the video ads they serve. He spoke of very high engagement rates. I asked what percentage of the engagement was "mistake" engagement -- that is, people trying to close the ad but missing and clicking the ad or not being sure what to click to close it, similar to when flyover and layer ads arrived on the scene years ago.

Today VideoEgg is launching AdFrames, a program that charges advertisers based on engagement (CPC/CPE) instead of views (CPM). VideoEgg notes that they have dealt with mistake engagement, "Engagement doesn’t begin until a user rolls over the ad, and the AdFrame Invitation has expanded into an overlay. AdFrames includes a countdown during the roll-over to ensure the user is not engaging with the ad inadvertently." From my basic testing, the countdown is three seconds, that's the time that the user must keep their mouse over the ad before it plays. This should help eliminate some of the mistake engagements but not remove them 100%.

In their sample ads, when the user engages with the small teaser ad unit, the ad opens up full page. These type of takeover ads should pay out very well, both for the advertiser and for VideoEgg.

It's a very smart program and should help to continue the shift away from traditional CPM (cost per thousand) advertising. The question is whether there will be enough engagement to make it financially beneficial for VideoEgg. By removing some of the mistake engagements, will the fill rate be high enough?

VideoEgg is also going to manage the entire process, something they claim will save customers 10-20 percent or more of the advertiser’s cost. They are looking for publishers with more than 10 million video streams per month.

Microsoft has signed up as the first advertiser in the new AdFrames product. VideoEgg will still offer their CPM-based advertising programs as well.

I assume this will be a topic of discussion at the VideoEgg Engagement Debate this afternoon in NYC. I will try to get some time with the executives to learn more and will report back.

VideoEgg has announced a new partnership with imeem, Metacafe and Buzznet to push its EAP (Eggnetwork Advertising Program) to these sites. The company believes this will expand the reach of their ad network by nearly 50 million users. This is a huge distribution deal as they were working only inside Facebook and with a few apps (Bebo, Hi5 and MyYearbook) previously.

It's all about the targeting -- VideoEgg taps today’s rich social networking data to intelligently aggregate appropriate audiences for advertisers. With all of the information that the social network knows about each user, they can send the best ad to that user maximizing the potential for return on advertising spend.

Check out our interview with VideoEgg CMO Troy Young where he explains how the EAP works. It would be interesting to get an update if they have improved their analytics platform - I found it lacking on first review last September.

On Thursday, Meebo will announce a new partnership with VideoEgg to monetize the applications build on the Meebo Platform. We spoke with VideoEgg CMO Troy Young about their Facebook platform advertising and my guess is the same points will apply for the Meebo platform. And Troy added regarding the partnership, "The meebo Platform and partner applications offer an excellent environment to connect users to brand content. With this partnership, the Eggnetwork will grow well beyond the 50 million unique users we reach today."

Marshall calls Meebo a closed platform but I think his use of the word "closed" is incorrect. Meebo requires approval for applications to use the platform whereas Facebook allows anyone to create applications on its platform.

Over 40 multiuser and synchronous applications are available to meebo users today. Titles from 3rd Sense, Absolutist, AddictingGames, BladeSix, Clearspring Technologies, Come2Play, Feedhaus, Gamebrew, MeBeam, MediaGreenhouse, Mochi Media, Jiggmin, Kongregate, PlayFirst, Presidio Media, Pudding Media, TalkShoe, TokBox, Ustream.tv, uWink, wellgames, and ZeroCode exemplify the kinds of multiuser and synchronous applications being built on the meebo Platform every day.

Meebo has been making some huge moves recently including gaming and Joost for chat. Check out our interview with CEO Seth Sternberg as well. Meebo can no longer just be considered a Web IM client.

Earlier this week I sat down with the Chief Marketing Officer for VideoEgg, Troy Young. We spoke about VideoEgg and the Eggnetwork Advertising Platform (EAP).

The company started with a video platform that was always meant to be syndicated. They have grown to currently serve between 5-6 million video streams a day. In the last six months, they pulled the ad technology out of the video platform to create EAP which currently works for video and Facebook apps with mobile and other 3rd party platforms coming soon. EAP creates an "invitation to interact" and can show basically anything in the window if the user mouses over the invitation.

Troy said that "banners suck" and banners don't work anymore because they have lost their sensitivity. The EAP network currently has 150 publisher sites and 250 major brands have utilized the platform.

They create an excellent way to monetize your Facebook applications as the code/API takes minutes to install and since Facebook knows who you are, they can deliver the right ad to the right person. They work on creating micro-experiences inside the ad player versus just sending someone off to the advertiser's Web site. Ringtones appear to be pretty popular currently. Current publishers include: Bebo, Hi5 and MyYearbook. Facebook apps include iLike and RockU. VideoEgg does not have a relationship with Facebook, just the app developers.

Their core principles are:

• Engagement is everything
• Media is community
• Buying rich media should be super simple

The VideoEgg team is about 90 people with headquarters in San Francisco and a Sales VP in NY and London.

The last item we discussed is their reporting. Troy noted that their ad units receive 5x the interaction of a traditional banner creative. They count an interaction as someone mousing over the overlay. I am not sold on this as the proper metric for this type of ad. Anytime someone is faced with a new type of ad, they will typically do something with it as they don't know how to close it. Remember fly overs and popups? I sure hope one day (soon) we can get to at least baseline industry metrics for online advertising because what we have now leaves advertisers without a full picture for comparison.

Thanks to Troy for taking the time to meet with me during Advertising Week!