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VideoEgg Tries 'Cost per Engagement'

Online ad network VideoEgg is rolling out a new video format for brand advertisers that will charge them only when a user interacts with their ads. Called AdFrames, the units appear like standard display ads with a few seconds of preview video. Users mouse over the ads to display a Flash window that shows the full clip without leaving the page. VideoEgg plans to charge advertisers between 20 cents and $1 per interaction.

Reminds me of the days when banner Cost Per Click ad networks were all the rage (remember Advertising.com?) Until the ad servers figured out how dismal clickthrough rates really were and weren't making any money from it. At which point it disappeared.

Average interaction rates from rich media vendors like Pointroll are around 7%. So if I spent $100,000 at $15 CPM, then that would get me 6.6 million impressions. Which would equate to 462,000 interactions.

Based on their model, assuming they were charging 75 cents per interaction, they would instead charge me $346,500. Somebody in media with a calculator please check my math.

So at that rate, my $100,000 budget really only gets me 133,000 interactions. Which reverse maths out to 1.9 million impressions. Which means you really need to assign a big brand value on interactions with those ad units. Which gives Dynamic Logic something to think about, instead of continuing to tell me to use larger ad units and put the logo in the first animation frame.