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AdGenesis Inks Reward-Based Ads Deal

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Increasingly, people are going out of their way to avoid ads. But a company called AdGenesis is betting it can make consumers do just the opposite.

The company is an ad-matching service that’s based on the idea that people will sit through Web video ads to get a reward like a coupon or discount from the brand.

Founded in 2009, AdGenesis is announcing today that it has linked up with newspaper insert Parade, which it hopes will be the first of many publishers to white-label the service. The way it works: The consumer signs up for the service on Parade.com, where it’s called Parade Video Rewards. When she meets the criteria of a participating advertiser based on buying habits she’s shared, she gets an e-mail containing a link to the video ad (typically a 15- or 30-second ad) on the host’s site. Once she verifies that she’s watched the ad, she gets a reward, at which point the advertiser is also charged. The partner site gets traffic and a cut of the ad revenue.

Richard Smullen, AdGenesis’ co-founder and CEO, said unlike interruptive ads, these video ads reach consumers when they’re receptive to marketing messages. He said that in a test of 150,000 users, at least 10 percent opened the ad-notification e-mails they got and of those, at least 24 percent clicked and viewed the ads.

“It's giving [the ad] to them on their own time and when they want to watch it, so [it shifts] the whole paradigm to make it more about the consumer as opposed to about the content,” he said.

The company reports it’s raised $5 million since its inception. Its executive council includes Michael Kassan; Gerry Byrne, former svp of media and entertainment at Nielsen; and Rick Sirvaitis, former president and COO of GM Mediaworks. Macy’s, Dentyne and Starbucks are among advertisers that have tried the service.

But like AdKeeper, a similar new service that lets consumers stash online ads for later viewing, AdGenesis is betting on the somewhat curious concept that people will purposely seek out ads. Some skeptics also wonder whether ads seen outside the context of content are as or more effective than interruptive ones. Historically, opt-in advertising has had a hard time getting enough people to participate to make the model work.

Smullen insists that his model doesn’t require much scale because the participants are already in the purchase intent stage. Plus, he says, the concept is particularly interesting to advertisers now as they’re looking for ways to target without being accused of invading consumer privacy.

Parade’s publisher, Brett Wilson, saw the AdGenesis concept appealing to his deal-focused audience, especially in tough economic times. “There’s a renewed interest in younger people to save money and find deals,” he said.