In August 2007, VideoEgg started selling ad units for Facebook applications. Since then they’ve expanded to include advertising for many other sites, including Meebo, Flixster and others. Today at an event in New York they’ll announce a business model change, moving away from charging advertisers a cost per thousand impressions (CPM) for their display ads to a new model where advertisers pay only when a users has engaged with the ad. The new product is called AdFrame Brand Response Network. Engagement is defined as clicking on the ad, or hovering over it for a second or two. Once that happens, a new Flash overlay pops up over the content on the page and shows a video, Flash game and other content. Once the Flash overlay is triggered, the advertiser pays a fee of $.50 - $1. VideoEgg CMO Troy Young says its a much better deal for advertisers, since they pay only when they have a verifiable action by a customer. And publishers, while they don’t get a guaranteed fee per impression, may make more money anyway. VideoEgg says they were able to charge $10 or so CPMs for their ads previously. The new ads, which have engagement rates of .5% - 9%, generate comparable CPMs of $2.5 to way above $10. Microsoft has signed up for the new product as an advertiser, and will use it to distribute videos promoting Microsoft Office.http://www.techcrunch.com/2008/02/20/videoegg-rich-media-ads-pay-only-when-users-engage/
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