Ad network VideoEgg, which specialises in rich-media banners, is switching gears and offering a new model: Rather than pay on a cost-per-thousand basis, advertisers only pay for viewers who actually launch and watch at least part of the ad, typically a flash video that pops out from a frame or banner.
It’s similar to the cost-per-action model for search advertising. Here’s how it works: VideoEgg produces pop-up video ads that play within a banner, but take over the page when a cursor passes over. In the new model, the advertiser only pays when someone launches the video and stays with it a second or two. The idea is to screen out those who inadvertently launch the video; for those that do “engage,” the advertiser pays between $0.50 and $1. Microsoft has signed on as the first client, and will run a campaign of shorts starring comedian Amy Sedaris.
VideoEgg CMO Troy Young told TechCrunch they were able to charge a cost-per-thousand (CPM) of $10 under the old model. Since the new format’s egagement rates vary widely–from 0.5% to 9%, he says — effective CPMs will range from $2.50 to “way above” $10.
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