VideoEgg Offers 'Per Engagement' Pricing

In a play for the deep pockets of brand advertisers, VideoEgg has introduced a new “per engagement” pricing model on its ad network.

Called AdFrames, the new offering allows marketers to pay for rollover ads on VideoEgg’s Eggnetwork branded ad network based on the number of user-initiated ad interactions that occur on partner sites, rather than the CPM-based approach that accounts for the bulk of online brand advertising now. VideoEgg specializes in ads that appear in video clips and Facebook applications.

VideoEgg is asking marketers to cough up 75 cents per engagement on the so-called “brand response network.” “Engagement” is generally defined as a user-initiated rollover action that results in a sustained ad expansion. Once expanded, an ad may contain a video, game, or other of rich content. It happens without taking an Internet user away from her preferred Web page, and marketers only pay when an individual completes an action.

It’s up to VideoEgg to optimize the placement of so-called “invitation ads” to guarantee the requested number of engagements in an advertiser’s target demographic, said Matt Sanchez, VideoEgg president and CEO.

“They’re buying a particular demo and number of engagements and we’re taking the risk on delivering that amount of attention,” he said. “That’s a layer of complexity the advertiser never has to worry about.”

Launch partner Microsoft is using the offering to promote its Office 2007 suite using a long-form video starring comedienne Amy Sedaris.

AdFrame ads will appear on sites and Facebook apps where VideoEgg represents in-page display ad inventory. Included are Web-based IM platform Meebo and the “canvas pages” for Facebook app owners like Flixster and RockYou.

Jeff Lanctot, VP of media and client services for Avenue A/Razorfish, said VideoEgg’s pricing model appears to be a variation on cost per click pricing. He added it’s high time for such an approach vis-À-vis brand marketing — and for more experimentation around video ad serving and pricing in general. In an era where many have called for more standards around online video ads, Lanctot said, “I’m one who says let’s wait.”

VideoEgg’s Sanchez agreed, not surprisingly. He added traditional approaches to video advertising are particularly lacking when it comes to apps on social networking sites.

“Going with standard IAB [Interactive Advertising Bureau] display units is not a compelling solution for this new media landscape,” he said. That’s literally true in the case of Facebook, he added, where “the canvas page is narrower than Facebook page” and hence can’t accommodate many IAB standard units.

Originally known for its in-video overlay ads, VideoEgg now derives fully half of its business from ad representation in apps, CMO Troy Young told ClickZ in January. He said the company earns gross revenue of approximately $1 million a month from its app-based media sales, totaling $1.5 million in total payouts to app owners.

VideoEgg will roll out AdFrames across its network in the coming weeks.