ScanScout Taps New CEO

Video ad network ScanScout has tapped About founder Bill Day as its new chief executive.

Day takes over from Waikit Lau, ScanScout’s cofounder, who has served as interim CEO of the company following the departure of CEO Doug MacFarland in December. MacFarland helmed the firm for one year. Lau will now return to his role as president.

Day, 44, comes to ScanScout from local ad player Marchex, where he was chief media officer for about a year. Day is best known his role as a cofounder and onetime CEO of About, the compendium of topic articles that The New York Times Co. acquired in 2005. Prior to joining Marchex, Day served as CEO of adware company WhenU, which subsequently jettisoned its business model and changed its name to MeMedia.

New York-based ScanScout is leaning on Day to differentiate its offering from several other ad technology vendors and networks competing for a piece of the still-small video advertising market. It runs ads on sites like Veoh and Funny or Die, and networks like Broadband Enterprises. Overall, ScanScout says its ads reach about half of the overall Internet audience.

Day said he was attracted by ScanScout’s technology, which gleans data from video content and matches that material to overlay ads. The technology can also sniff out inappropriate content, reassuring some brands that are squeamish about advertising in user-generated content.

Day is no stranger to ad networks. While serving at About, the company launched an early contextual ad network called Sprinks that was for a time a main rival of Google AdSense. In 2003, Google bought Sprinks and took over its publisher relationships.

While users continue to consume more online video — over 300,000 watched the final of the U.S. Open tennis tournament earlier this week — it hasn’t generated that much revenue. EMarketer estimates the entire U.S. online video ad market is worth just $1.2 billion, which should rise past $4.5 billion in 2012.

The biggest problem for online video advertising has been in the area of user-generated content. That predicament is especially clear at YouTube; even Google CEO Eric Schmidt has admitted that the site has proven difficult to monetize from ads. Sterns estimated YouTube’s 2008 U.S. ad sales would reach $90 million, a paltry amount for one of the Web’s most popular sites that served 5 billion video views in August, per ComScore. The main method YouTube has used, other than traditional display advertising, is overlay ads.

“I don’t know why YouTube hasn’t seen successful,” Day said. “The response rates we’ve seen and renewal rates from advertisers have been very strong.”

Day said the answer to cracking the code of marrying advertising with user-generated content relies on using technology to make it relevant and give brands a level of comfort.

“That’s a big opportunity,” he said. “There is a lot of video that’s not well leveraged by advertisers, but they’re not comfortable or don’t understand how to tap into that video without damaging the brand.”

ScanScout competes with video ad tech providers like YuMe and networks such as Tremor. It closed a $7 million Series A round of funding in 2007 and took an undisclosed strategic investment from Time Warner later that year.