VideoEgg Hatches Plan to Grab Viewers, Revenue

Startup Joins YouTube, Google in Quest for Elusive Online-Video Ad Model

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NEW YORK (AdAge.com) -- Google has struggled to find viewers for its video offering. YouTube hasn't figured out how to monetize its massive audience. But one startup, VideoEgg, is betting it has the recipe for both, despite facing a crowded field of companies jostling to find the best business model for online video ads.
VideoEgg is presently avoiding pre-roll ads in favor of post-rolls and permission-based video. Depending on how those ads are packaged and sold, CPMs will range from $20 to $30.
VideoEgg is presently avoiding pre-roll ads in favor of post-rolls and permission-based video. Depending on how those ads are packaged and sold, CPMs will range from $20 to $30.

VideoEgg provides established social networks with simple video-uploading and -sharing tools and then helps site owners monetize that video. Across its entire network, VideoEgg is serving north of 14 million video streams a day. YouTube, by way of comparison, serves more than 70 million daily streams. In the next month, VideoEgg plans to introduce an ad model that will place ads on about half the videos streamed across its network.

Ad model remains elusive
The universe of online video holds great promise for both media owners and advertisers. But the explosion of user-generated content has caught some off guard, and a clear ad model remains elusive. Meanwhile, companies that try to hold too closely to a traditional TV model are criticized for trying to exercise too much control.

Consider Google's entry last week into the online-video-syndication business through a deal to distribute video from Viacom's MTV Networks, such as "SpongeBob SquarePants," on sites participating in Google's AdSense Network. The deal doesn't allow websites to choose individual clips, but rather allows them to post a player that will show a programmed series of clips that Viacom will determine and rotate on a regular basis.

Google and Viacom are entering a crowded space filled with video ad networks testing contrasting models. MTV Networks is selling the ads that will accompany its clips, and will receive more than half the revenue. That follows the model of other video networks focused on selling ads on online video. Networks such as Brightcove and Revver offer content producers anywhere from 50% to 70% of ad revenue, and offer sites that carry their video 20% of ad revenue. Roo has a similar model.

VideoEgg Chief Marketing Officer Troy Young stressed how many variables can affect revenue splits, but said with his company major content producers can expect at least 30% of revenue while the remainder is split between VideoEgg and host sites.

YouTube's promised ad network
Now consider YouTube, which still fails to monetize the vast majority of its streams, relying on "safe zone" sponsorships with NBC and Disney. Julie Supan, YouTube's senior director-marketing, promises that an ad network is coming that will capitalize on the site's "long tail" with ads that will delight sponsors but won't turn off users.

Unlike Google -- which plans to experiment with both pre-roll and post-roll ads in its syndication deals -- VideoEgg is presently avoiding pre-roll ads in favor of post-rolls and permission-based video, which uses a small banner under the video box to ask users whether they care to see an ad. Depending on how those ads are packaged and sold, cost-per-thousand rates will range from $20 to $30, Mr. Young said.

If VideoEgg is successful, the site's strategy will go a long way in realizing the highly speculated potential of the "long tail."

The site is also working with third-party behavioral-technology companies to match ads on videos to viewers' tastes. "We plan on offering video and audio assets for remix, giving users choices of the brands and categories that they would most like to be associated with," Mr. Young said.
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