VideoEgg Dying a Slow Death?
Posted by Nick O'Neill on June 10th, 2008 11:28 AM
“I don’t use VideoEgg anymore.” Just hours into the Graphing Social Patterns East conference, I have heard multiple developers tell me how they no longer use VideoEgg to fill their inventory. The problem? Same as it was 12 months ago. VideoEgg doesn’t have enough inventory to fill the massive demand for it. It also happens to be the same problem I wrote about this morning: the demand is practically limitless.
Initially VideoEgg was known for their great CPMs (cost per thousand impressions) but even that has begun to dwindle toward the $1.00 mark. To add fuel to the fire, VideoEgg has around 100 employees which helps them burn through their $27 million in funding. As it should be, most of their employee base works on the sales team. So where is their sales team located? Not in New York, London or L.A. where the advertisers are. They are working out of their office in San Francisco.
The company surely doesn’t need an extremely large sales team to go pitch the San Francisco Giants. I shouldn’t be completely down on the company though. They have an amazing ad system and some of the dynamic ads that they display have incredible quality. Take a look at the VideoEgg website to see examples.
VideoEgg has a short amount of time to get their team under control though. The company has hired a team of people which aren’t able to produce as far as I can tell. Every developer I’ve spoken with has dropped the company due to their inability to fill inventory. In a world where the ad companies must satisfy developers, VideoEgg is failing and despite their substantial funding they have already damaged their reputation. Do you think the company can be saved?
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Thank you for starting the conversation about brand advertising and supply/demand issues, but your post is so factually inaccurate and inflammatory it’s irresponsible. Please know that I am more than happy to have a conversation with you at any time about what we are doing as a company and our perspective on the industry (matt at videoegg.com). It's too bad you didn't do your homework before writing a piece as inflammatory as this one. Here’s our perspective...
What you got right:
- We do have around 100 employees
- Our ad approach is incredibly well received in the market
- “the demand is practically limitless”
What you got wrong:
- We’ve actually raised $35mm to date
- We have a large sales force selling in 8 markets in 4 countries and have offices in all of the cities you mentioned.
- Because of significant variance in the media value of various pages/apps/etc. we offer a performance model for brand advertising. As a result, there is a wide range of eCPMs that our publishers see from as little as $.20-.30 to as high as several dollars ($4+). Publishers with engaging applications are doing very well with ads from VideoEgg. An email from one of our publishers this morning to illustrate: “The US FB numbers are fine, we’re quite happy with them – but we’re already giving you all the inventory we can. The only way to get more inventory is to have more traffic, which sadly we can’t control. ”
What we think is important about the issue you are exploring:
- Social media is a great place for brands to connect with their target audience...their usage is consistent with spending time with a brand message.
- We have a long way to go as an entire industry in creating more demand from brands for this channel. It’s a challenge that we must all work on through better product, more efficient pricing, standardization, and scale.
- Brand advertising is lumpy. It’s driven by media plans and fixed advertising budgets and as a result creates very different fill patterns for publishers. You can’t just turn on the spigot like you can with direct response.
- That being said, brand advertising will create more value for a publisher than DR because it has more value for a user in these media environments (they’ll actually engage with it). When ads like ours are available, they’ll always perform better for the publisher. The problem that needs to be addressed is better inventory efficiency. This can be solved through yield management, exchanges, etc., but the reality is that there will always be more supply than demand in social media.
As we continue to innovate on the ad experience front and build out our sales force, we will provide more and more value for publishers. The dynamic you are describing isn’t a problem, it’s an opportunity. It is incredibly exciting to reflect on just how much attention and activity is being directed at social media today, but it will take time (read years) for brand advertising to evolve in social media and publishers shouldn’t expect consistently high fill rates in the short run. Again, it’s going to be lumpy. They need to mix high value brand ads with low value DR ads to maximize their revenue.
We are incredibly excited about advertisers’ response to our approach, and the success of our sales force in all of our markets, but this will take time and we’re all in it together. I look forward to continuing a conversation about how to address all of the challenges and opportunities that brand advertising presents in social media.
Matt Sanchez
CEO, VideoEgg
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