Online Video Advertisers: Enough Double Stuf, Time to Get Targeted

2/19/10Follow @wroush

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‘You’re a premium brand, so whatever you give us, we’ll assume it’s of interest.’” No wonder Hulu keeps showing me a Dove soap ad, even though I prefer Dial.

Day says ScanScout is working to make online video advertising work better for everyone—advertisers and viewers alike. “Our clients suffer from this incredible problem,” he told me when I visited the company’s headquarters in Boston’s Leather District last week. “People are becoming better and better at tuning ads out, while at the same time ad frequency keeps going up and up. So the question becomes, how do you create advertising that is interesting to users?”

Google solved this problem in the realm of text ads long ago. First, it realized that people searching terms like “kitchen remodeling” are more likely to be interested in ads for Home Depot than for Travelocity. Second, it introduced a payment system so that Home Depot only pays for the kitchen-equipment ads when people actually click on them. Everybody wins.

“We see the potential for a similar model evolving” in online video ads, Day says. How would that work in practice? You can see for yourself in ScanScout’s online ad gallery. The most advanced example, right now, is what the company calls “Super Pre-Roll,” in which designers at ScanScout take standard ads supplied by its ad-agency clients and soup them up with interactive Flash-based features such as real-time polls. ScanScout believes that if it can engage viewers through such features, it’s much more likely to leave them with a strong impression of the brand supporting the more engaging content, and maybe coax them to take an action such as clicking through to an advertisers’ website.

It’s so confident about this theory that it’s proposing charging advertisers under a completely new system—CPE or “cost per engagement,” the video equivalent of Google’s cost-per-click pricing, rather than the traditional CPM or cost per thousand impressions.

“When you make an engagement model work, it powerfully aligns forces that haven’t been aligned,” says Day, who co-founded ScanScout with president Waikit Lau and chief technology officer Steven Lee in 2005. “Clients only want to produce really great creative, and they only want to show it to the right people. We only get paid for showing it to the right people—so if you are not inclined [to watch], we are not going to waste your time.”

But ScanScout doesn’t rely solely on the allure of its Flash features to boost engagement rates. Before its network even delivers an ad to a viewer, its software goes to work indexing the … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://www.dailygrommet.com Jules Pieri

    Thanks for this article Wade. I liked the dissection of your own online viewing experience of advertising very much. I like hearing about your experience because I have had similar ones in the few times when I did watch a show online. As they say in Dublin, “It just does your head in.” (to watch mindless repetition)

    Even more, I like that you are highlighting the incredible richness of video infrastructure, analytics, and search companies in the local area. I don’t see that important specialty of Boston mentioned often enough in the press, at least outside of Boston.

  • http://www.adeliestudios.com Eric Guerin

    Hey Wade – Fantastic post and I completely agree with your opinion, my personal pet peeve is pre-roll on short form video content. I actually posted about it on my blog this morning and there is an interesting conversation going on about it:

    http://www.adeliestudios.com/blog/pre-roll-overlay-video-ads-horrible-idea/

  • Brendan

    Great piece, but i would note that when you check ScanScout’s demo section you will notice that Fox’s The Donalds vs. The Mannings you complain about seeing over and over again is actually a ScanScout ad.