P2P Ad Firm Skyrider Unveils Video Product

While many users of open source file sharing systems despise the commercialization of those services, Skyrider intends to change that. The firm is launching a new video ad product today, something President and CEO Ed Kozel hopes will help bring peer-to-peer, a.k.a. P2P, into the “normal world.” For him, that means making P2P networks viable places to advertise.

The P2P network space is “very large; it’s very viral…and as a channel it’s largely centered on entertainment,” said Kozel, a former Cisco Systems executive and current Yahoo board member.

The company is expanding the ad service it launched in October to include dynamic advertising built into audio and video files. For example, if a P2P user downloads a sponsored music video, “events” placed within the video files would trigger ads served at particular spots while the video plays. Using Apple QuickTime, these events might launch “bug overlays” on the videos, or serve ads that appear as part of the video and link to a Web page featuring a targeted message. Ads can be targeted by entertainment genre, geography or date, if, for instance, an advertiser is promoting a live event.

The video service is launching in Gnutella, an open source distributed network accessible through clients such as LimeWire. Because it is a decentralized system, the number of Gnutella users is difficult to peg; however, the network reportedly hit the two million user mark in 2005. More recent estimates from Web media measurement firm Big Champagne show P2P networks attracted over nine million users worldwide in September 2006.

Until now, the P2P ad experience has been dominated by pop-up launching files, decoy files featuring songs, or snippets of songs placed by entertainment companies for viral marketing efforts, and banner ads served within the search interface. P2Pads, for instance, is a company serving banners and pop-ups embedded within content that’s distributed in peer-to-peer networks; ads are targeted by keyword, demographic or category.

Such approaches have left a sour taste in the mouths of some peer-to-peer users who say the ad-supported files are often disguised as regular files. Unmarked ad-spawning videos and decoy files have earned the title “P2P spam.”

Skyrider’s sponsored text ads and new video files are marked with the phrase, “sponsored results” when appearing in query results. If moused over, the video files display additional text about the file and copyright owner. Kozel acknowledges “spam is a problem in peer-to-peer networks,” and assures his service does not enable spam, spyware, or pornographic ads.

No advertisers are using the video ad product yet, according to Kozel, who said the firm’s small sales team is seeking out likely ad client candidates including music artists, record labels and media brands. The company’s reports show where P2P users are located and can also determine which searches are most popular to pinpoint demand for certain types of content.

Thumbplay.com, a retailer of mobile ringtones, games and graphics, has advertised using Skyrider’s search ad service, which displays sponsored text links alongside P2P query results. Mike Park, manager of integrated partnerships for Thumbplay, uses the CPC-based service to reach people searching on pop culture and media-related keywords. “So far, it seems that we can continue to scale our campaigns,” he told ClickZ News, adding, “more keywords and higher bids equal more traffic without negatively affecting performance.”

Because Skyrider’s video ads are served dynamically, once one campaign is complete, events embedded in the videos can prompt ads from different advertisers. For the content owner, said Kozel, “It’s the gift that keeps on giving.” At this point, the company has not yet determined how much ad revenue it will split with content owners.

Of course, the problem is much of the content shared via P2P networks today is not being distributed by content owners themselves. Rather, users continue to defy copyright laws, despite prominent court rulings against file sharing firms like Napster and Grokster.

Still, Kozel has high hopes for the potential of everyday users employing networks like Gnutella to post homemade video, eventually “creating a data center-less YouTube.”

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