Eggnetwork and 2 Ways to Success for Any Video Ad Network
Posted by Mike Bijon August 17, 2007
The Eggnetwork , launched by VideoEgg and profiled by Michael Arrington may seem to be just another video advertising network. However, I believe the people over at VideoEgg have made another prescient decision about the direction of web video and how to monetize it. VideoEgg first migrated away from the content publishing/page view model as a paid service provider for publishers looking for an easy way to add video to their sites. Next they added value for their publishers with strong ad sales efforts using their partners content and a revenue-share model. With the Eggnetwork they are moving to expand the revenue-share portion of the business by displaying ads on sites other than those using them as a service provider.
Where the Eggnetwork stands out from most existing ad networks is in the ad sales efforts that are already successful on VideoEgg’s partner sites. Just like Weblogs, Inc. made actual cash by grabbing a slice of corporate/agency media buys, VideoEgg stands to do the same thing. Agency planners base their buys and target CPM on how closely a site or network indexes to their target audience, and they will put in plenty of effort to find sites that index high and their competitors haven’t found yet if their clients are moving strongly online. The key for video advertising networks to succeed is not only to attract a certain volume of ads, but to also keep the CPM high enough that their portion of the revenue-share will more than pay the cost of bandwidth to display all those video ads.
I think the crux of Eggnetwork successfully building a profitable publisher network isn’t in the sales & volume efforts, after all they’re already way ahead of most video-only networks, but in signing up enough quality page views to keep the network growing profitably. That means either:
- Finding narrow-audience sites with that haven’t already put their inventory in the hands of bigger players. This type of site self-targets and produces a high CPM as a result.
For example: Facebook has signed their impressions over to Microsoft recently, thus Eggnetwork’s targeting of Facebook App publishers and their large number of page views.
- Attracting a huge number of small sites and then accurately indexing their content so page/video views are targeted enough to warrant advertisers paying a CPM high enough to pay the bandwidth bill.
For example: AdSense’s targeting produced high CPM for blogs that couldn’t get anything but low CPM ads from traditional networks who targeted based on category. That ability to index put them on top of the CPM heap for many sites.
If the Eggnetwork fails to do either, then odds are they’ll fade away when the VC dollars run out or VideoEgg will acquired cheaply by a much larger player. If they do manage at either of the above, they’ll be a sizable, premium network to be picked up at high value, like Right Media, or become a strong stand-alone network. As a stand-alone network, they will need to continue sales efforts as they’re, likely, joined by dozens of other networks in the years ahead.
Putting Eggnetwork aside, I think there is room for many non-public, online advertising networks. Few of them will be video-specific or ad-type specific (see Google expanding into CPM and video ad formats) but most that succeed will be able to target the web viewers closely. When this happens agencies will accomodate and deal with the many distinct publishers (online networks in this case) rather than isolating their buys to a single network or a few large publishers. As a result, online advertising will reach an equilibrium with the publisher space looking more like the current print newspaper & magazine market.
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These views, predictions, generalizations of agency processes, and everything on this site are my own. I work for a Publicis Groupe company, Team One and they have not reviewed, recommended, or approved this content.
Mike Bijon: I work as senior technology manager and technologist for 
