WPP Takes a Stake in VideoEgg

Advertising and marketing services giant WPP Group is making a strategic investment in online video ad startup VideoEgg, joining prior investors August Capital, Maveron and First Round Capital.

The amount of the investment was not disclosed, but VideoEgg Chief Marketing Officer Troy Young said the investment — coming through GroupM Interaction, WPP’s investment arm — closes a $12 million Series C round of financing led by Maveron announced in September. At the time, Maveron’s managing partner, Jonathan Fram, said the value of VideoEgg’s technology was its ability to “create simplicity for consumers.”

In announcing the WPP agreement, VideoEgg, a two-year-old, San Francisco-based company, said WPP’s support illustrates the growth potential of properly-executed video ads distributed over online communities.

VideoEgg operates an ad network called The Eggnetwork that has more than 60 online communities and five of the top 20 social networks, according to the company. The social networks include AOL, Bebo, hi5, myYearbook.com and Tagged.

VideoEgg also created the VideoEgg Publisher, a small browser plug-in that allows fledgling Web publishers to capture, encode, upload and share videos online. The Eggnetwork gives those publishers a way to make money off of content while providing advertisers with a method of reaching a “coveted audience,” according to VideoEgg.

Video ads on the Eggnetwork are based on an “invitation-based” model that seeks to be much more user-friendly than traditional pre-roll adds. The Eggnetwork offers advertisers several methods of video ad delivery, all of which are initiated by viewers and easily turned off.

“It’s all about what we call ‘Nice Works,’ said Young. “It has to work for three folks: The consumer first and foremost, since we found there to be a tremendous backlash against pre-roll. It also needs to work for advertisers … and it needs to work for our publishers.”

The key to fulfilling all those needs are ads that are “visible but not intrusive,” said Young. For example, one type of Eggnetwork ad uses a small “ticker” window that appears at the bottom of an online video clip. If the viewer is interested in seeing the ad, he clicks on it. This causes the main video to pause while the ad video plays.

A “custom ticker” option can have other forms of enticement appear at the outset of the main video, such as a bouncing ball that comes to rest on the screen and can either be closed or clicked on to play the ad while the main video gets paused.

“There’s a rich ability to target those users and make engaging creative inside of the platform,” said Young. “The solution was born out of the question, `How do we create an advertising solution that’s not going to alienate viewers in places like Bebo and our other 70 sites?’ What we’re doing is creating interactive layers over the top of the videos.”

VideoEgg was formed by Yale classmates David Lerman, Matt Sanchez and Kevin Sladek. Young joined the company in July after leaving his post as chief experience architect at Organic. At the time Young said he was not fearful of the competition within the field of video creation, editing and sharing. “The team is extraordinary and the core technology can’t be beat,” he told ClickZ. “Video on the Web is a very expansive space, as the whole Web turns into a multimedia environment.”