Toward A More Polite Ad Model For User Video

How can one advertise on videos of toilet-trained cats? This and other unlikely questions are getting a hard look, thanks to the explosion of user-generated content. Social networks like Bebo, Hi5 and Tagged are betting on the polite approach: inviting users to view advertiser content.

Those sites and others are part of an ad network created by VideoEgg, a San Francisco firm that is expanding from providing free video upload tools into selling advertising. Rather than running TV-style spots before clips, Eggnetwork inserts text links and simple graphics at the end of them that direct users to a brand’s video, game or product offer, targeted via data on users’ demographics and interests.

The tactic could offer unobtrusive advertising in social networks, which have become potent video-distribution vehicles. MySpace last month overtook YouTube as the top video site online, but even YouTube and Google Video depend on social networks and blogs for a significant percentage of their video views. A video of skateboarding tricks or a birthday party might only draw a couple dozen viewers, but such “long-tail” content, when aggregated, provides a big ad opportunity, according to Kevin Sladek, a VideoEgg co-founder. He expects the Eggnetwork will regularly serve 50 million daily video streams by the end of the year.

Troy Young, chief marketing officer at VideoEgg and a former executive with Omnicom Group’s Organic, said an interruptive ad model is unlikely to work with short user videos. “The time that someone is most open to a content recommendation is at the tail end of the first video,” he said.

The network, launched two weeks ago, has signed up Unilever, Coke and 20th Century Fox. The “endcap” ads get click rates of about 5 percent, Young said.

“It’s a very clever way to do this,” said Jim Scheinman, vp of business development at Bebo, while allowing, “We don’t know how well it will work.”