Friday, April 8, 2011

Start-Up Watch COD: AdExcite creates valuable video inventory with “new standard” ad units

The history of the banner ad market provides a classic example of the relationship between supply, demand, and pricing.

Most pubs were launched with the expectation that ad revenue could more than cover their operating costs. During the last dozen years, literally millions of sites have launched with this presumption. This led to loads of new banner ad inventory. The growth in the supply of banner ads outstripped the growth in demand, so prices fell.

In order to make up for the revenue shortfall, pubs added more units per page, which meant that supply growth accelerated, outpacing demand even more substantially. Additionally, the number of competing messages on pages reduced ad noticing value and effectiveness. Prices had nowhere to go but down still further.

And where have we ended up? Rock bottom pricing for ads on cluttered pages - ads that largely don’t work very well. Pubs lose. Consumers lose. Brands lose.

A company called AdExcite is out to change the paradigm by creating a set of broad reach ad units that offer great brand impact, pleasant consumer experience, and green for the pubs. This LA- and Austin-based start-up wants to improve the ad environment by creating “new standard” units at real scale. And they do all this through a technology platform that lets quality sites participate WITHOUT reengineering themselves.

The first offering is an over the page video plus companion ad that acts as a pre/interstitial.

Brands get more high quality video inventory to buy – with high quality editorial “surround.” Consumers get a video instead of six more blinky blinky click now banners on every content page. And pubs get to capitalize on the higher CPMs for video – even if they don’t offer (or offer much) video in embedded players on their pages.

Currently they are delivering 30-40 million plays a month. Certainly the appeal of these units is getting noticed. AdExcite reports broad video ad network acceptance of these units. Plus they are selling direct through Q1 Media.

AdExcite plans to deliver more than just these over-the-page-video plus companion banner units. They are also launching some other high impact ad experiences that any publisher can easily offer on their pages. These include:

•A “slider unit” that delivers a video or rich media unit in a slide-out format
•A ”mouse-over unit” that delivers video or rich media
Using their technology platform and units, AdExcite believes that pubs can get out of the “race to the bottom” -- a marathon that starts with short term revenue needs and ends with 18 blinking banners on a page at a nickel CPM.

An admirable and potentially lucrative goal. How often is it plausible that a lose lose lose can be turned into a win win win? Said Cofounder Phil Banfield, “The pubs that are signing on with us get it – their editorial content is valuable. They know they should be earning more for it and that their audience will understand the value trade-off, because our ads are presented in an attractive, acceptable and effective format.”

They are also working on a full publisher solution the enable sites to manage AdExcite and other third party ad providers from a single platform. Additionally, they plan to offer “new standard” ads in social media and mobile apps.

Thanks to ad:tech for running this first.

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