With xoJane Launch, Say Media Embarks on Transformation into a “Passion-Based Media Company”

5/31/11Follow @wroush

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instances of direct contact, whether that means getting a reader to explore an interactive ad, download a brochure, or sign up for an e-mail newsletter. “What CPE did was shift the accountability to us, to make sure that you only pay when we have people’s attention,” Sanchez says.

CPE-based advertising is generally more lucrative than old-fashioned CPM-based advertising that merely counts page views. The only problem with this new model is that it’s hard to get people to pay attention to an ad if the content around it isn’t relevant or compelling. “There was only so much we could do when we were an ad network that was just one of many different advertising partners that [a publisher] had,” says Sanchez. “Which was the precursor to the media-company move. If you control the content and the environment and you can think deeply about the publishing as well as the advertising side, then all of the learnings actually intersect.”

Say Media’s learning has been hard-won. Depending on how you count, Say is either Sanchez’s third or fourth media venture in the last eight years. The first one was MediaLiquid, which Sanchez co-founded with David Lerman and Kevin Sladek. It was a 2003-era network of 6,500 independent filmmakers who competed to provide non-profit organizations with low-cost public-service announcements for broadcast and cable outlets. The business failed, partly for lack of sufficient financing and partly because “non-profits maybe aren’t the best market to go after as a sole customer,” Sanchez says.

Along the way, however, the team saw how hard it was for the semi-professional filmmakers in its community to exchange videos via e-mail or the Web. They saw an opening for a Web-based video publishing system that would, in Sanchez’s words, “make it easy for people to add video to anything they were doing, whether that was an eBay listing or a personal blog post or whatever.” That’s how venture number two, VideoEgg, was born in 2005.

Within a couple of years, the new company was “getting all kinds of adoption” for its free, advertising-supported video hosting service, Sanchez says. But there were two problems. First, a rival called YouTube had sprung up at roughly the same time. Second, it wasn’t clear how to pay for the service. VideoEgg provided users with free video hosting in exchange for the rights to show pre-roll ads before users’ content, but there weren’t enough advertisers willing to juxtapose their ads with random user-generated videos. “Until brands found it to be a safe, effective channel to connect with their audiences, it was never going to take off,” Sanchez says. He and his co-founders thought they could solve that problem—so in 2007, VideoEgg morphed into a video advertising network (venture number three). For the sake of focus, VideoEgg shut down its video hosting service—a niche YouTube had already come to dominate. (YouTube’s founders sidestepped the advertising problem by selling their company to Google.)

Even after making the leap from hosting platform to ad network, however, VideoEgg hadn’t built a reliable revenue engine, Sanchez says. One issue was that video ads themselves still basically sucked. “People weren’t thinking about storytelling, sight, sound, richness, all of the things that brands enjoyed with TV advertising,” says Sanchez. “If you think about the way people consume media online, they see a headline that catches their attention and either they commit to a deep dive or they … Next Page »

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

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