Last year was the first time the online advertising industry saw a slump in revenues (JP Morgan is estimating a 5.2 percent decline, although things looked like they started to stabilize in the third quarter). But for online advertising network VideoEgg, 2009 was a great year. According to CEO Matt Sanchez, the company “more than doubled” revenues to $25 million last year and reached profitability seven months ago.
VideoEgg delivers more than one billion ad impressions per month, which reach an estimated 100 million consumers in four different countries. While that is not terribly big as far as ad networks go, it does show that VideoEgg’s “engagement ads” are showing some decent traction. VideoEgg has a pay-per-engagement model and offers unique ad units —including roll-overs, ad frames, video ads, and iPhone ads—which go beyond bland banner ads. For instance, VideoEgg’s ads invite consumers to roll over and click on them to open them up so that they take over the whole screen, and then they can be presented with a video, a mini-website, or even a shopping experience. VideoEgg only gets paid when consumers engage with the ads.
Sanchez says the engagement rate varies, but overall VideoEgg is still seeing more than 1 percent engagement, which compares to anywhere from 0.1 to 0.3 percent clickthroughs on run-of-the-mill banner ads. So although his ads are not yet seen by as many people as those of larger ad networks, he argues they are many times more effective. “There is tremendous liquidity in impressions,” he points out. At this point, “the idea of unique reach is a non-argument. Anyone can get access” to eyeballs. If this is the year the online ad industry begins to kill the CPM (cost-per-impression) model, VideoEgg is already on the right track.