VitalStream Acquires Streaming Ad Firm Eonstreams

Audio and video content delivery network VitalStream has just acquired audio and video ad firm Eonstreams. Through the all-stock acquisition, VitalStream is offering its publisher clients the ability to incorporate pre-roll, mid-roll and post-roll audio and video ads in their streaming music, TV, film and podcast content. VitalStream, a publicly traded company, plans to announce the acquisition at the Streaming Media East Conference in New York.

“Advertising revenue is a small fraction of what [streaming] TV has now….We want to be positioned to take advantage of this shift of dollars that we know is going to take off,” said VitalStream President and COO Philip Kaplan. Now that more and more people are accessing streaming content, suggested Kaplan, accommodating that audience is becoming more costly, so publishers will have to monetize audio and video through advertising.

The two firms have unofficially partnered over the past six months through work for mutual clients. According to Kaplan, VitalStream has used other streaming ad technologies from EyeWonder and Eyeblaster, but decided to take Eonstreams into the fold because of its complementary technology. Last May at the Streaming Media Conference, VitalStream announced a partnership with EyeWonder to enable video advertising on VitalStream’s on-demand video network.

According to Kaplan, VitalStream counted 714 audio and video publisher clients as of March 31, including Disney, MySpace, ABC, Spike TV, Comcast, NYTimes.com, P&G, Edmunds.com and CNET. Kaplan noted currently a “low double digit percentage” of his firm’s publisher clients are generating revenue from streaming ads. VitalStream delivers “well over a billion streams” per month. Earlier this month the company reported Q1 2006 revenues of $5.6 million, up 64 percent over Q1 ’05 revenues of $3.4 million.

Eonstreams serves streaming audio, video and banner ads that are sometimes synchronized and are targeted based on user registration data. The firm requires registration of all users accessing its clients’ content, much of which is streaming radio. The company can target based on gender, demographic, radio format, and region, and is currently developing frequency capping capabilities, according to Eonstreams CEO Steve Newman. Advertisers including Kraft, Toyota and HP have run campaigns using the company’s ad technology.

Eonstreams also lets advertisers track ad CTR and interaction. “Current media is at a hurt for measurement,” observed Newman, adding, “There’s going to be a point where the customer, the client, is going to demand accountability for what happens to their ads.”

Interactive media agency Gordet Schmidt has been running streaming ads with VitalStream and Eonstreams for about 6 months. “Other video ad services are serving up video online which is just part of the equation,” commented SVP of Interactive Media Ron Schmidt. “You can’t just have video streaming…you’ve got to have video streaming with audio streaming with banners.”

According to Schmidt, the agency currently is running an integrated video, audio and banner campaign for restaurant chain Shoney’s new Grizzly Burger on Nashville-based streaming radio station sites including Mix92.9 WJXA and 101.1 “The Beat Jamz” WUBT FM. The campaign combines pre-roll video ads with streaming 60-second mid-roll audio spots that encourage people to maximize their streaming players and click on the Shoney’s banner ad. The campaign is in the 4th week of its 9-week run.

Schmidt expects to do more advertising in video content as a result of the acquisition. “Based on that acquisition, it opens the door for us to do more of that,” he said.

Some Eonstreams clients choose the company’s ad sales services while others sell some or all streaming inventory directly to advertisers themselves. Spanish language media outlet Univision sells half of its streaming radio inventory through Eonstreams ad sales staff, said Newman.

Through the acquisition, VitalStream will add Eonstreams’s Knoxville, Tennessee headquarters to its group of offices in New York, Seattle, Los Angeles and its headquarters in Irvine, California. VitalStream has also established a European presence in Amsterdam, Holland.

Join ClickZ’s Online Video Advertising Forum in New York City, June 16, 2006.

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