Putting TV on the Internet is an obvious concept, until you consider how poorly it’s executed. We’re not talking about programs, rather commercials — which former CNN.com general manager David Payne argues can do better than pre-roll.

Payne is the founder and CEO of ShortTail Media, which specializes in giving Online publishers a platform for earning revenue through commercials. We’ve seen in all when it comes to Web advertising (well, most of it) and we’re comfortable saying STM’s model is palatable. When the content is right, it’s even mildly enjoyable.

Listen to the discussion about problems with Web advertising and ways to solve them.

With at least one notable online ad seller giving up on the banner ad entirely, a big question for 2010 is, will a slew of top publishers follow that lead?

ShortTail Media, which was founded in May of 2008 as an ad network alternative for premium publishers looking to protect the value of their ad inventory, has ditched its original business model to focus entirely on online video. After successfully testing a full-page video interstitial ad in the summer of ’09 dubbed the D30, the startup has recently inked contracts with several top publishers to begin offering the D30 regularly. These include NBC Universal’s iVillage, The Huffington Post, Time Inc.’s EW.com, several Rodale sites, Business Insider and the blogging company Six Apart. The New York Times and BusinessWeek.com have also tested the D30; and already, brands such as Best Buy, Ubisoft Siemens, AstraZeneca and Toyota have run campaigns employing it.

ShortTail concluded that brand advertisers are either simply not attracted to display ads or continue to view old-school banners as a direct-response vehicle only.

“In the last 18 months, the market has completely accelerated to performance side,” said ShortTail CEO David Payne, who previously ran CNN.com. “But the big honking problem with that is that display ads get valued .01 percent of the time.”

Payne is referring to the idea that most brand advertisers—even though they preach measuring engagement—continue to evaluate campaigns based on the click. And click-through rates for banners remain low, which makes branding efforts look ineffective.

“To me, the only place branding is happening online is with video,” Payne said. Yet he argues that even as online-video usage numbers soar, most publishers still generate the majority of impressions on text pages. Payne contends that the D30 allows publishers to monetize nonvideo content with more expensive video ads.

Thus, ShortTail’s vision for the D30 is nothing short of grand; the company sees the placement as potentially reinventing the entire online media landscape. “This really is the holy grail,” Payne said.

However, even as ShortTail signs on several key sites, the biggest sites on the Web (the portals and social-networking giants) are conspicuously absent—likely because they aren’t facing the same business model challenges that content producers are. Payne says he doesn’t need the Yahoos and Facebooks of the world to succeed. So far, buyers and sellers are bullish on the D30, though few see it as re-establishing the entire Web-ad market.

EW.com tested the D30 last summer and opted to sign on again this year after promising results. Tom Kirwan, EW.com’s national director of digital sales, said the placement answers a growing demand for high impact ad units, while also providing more consistent video inventory. “The conversation has been, how are we going to use the Web as a branding vehicle?” said Kirwan.

Often, that conversation turns to video. “With video, we have strong volume, but selling pre-rolls can be a challenge. Traffic is often driven by seasonal spikes,” he said.

However, Kirwan is looking at the D30 as a premium unit, not a display replacement. That thinking was echoed by Derek Murphy, senior vp, business development for The Huffington Post. “There is always going to be more text on publishers’ sites than video,” he said. “So there is a need.” However, advertisers also turn to HuffPo to tap into the conversations amongst its user base, something the D30 doesn’t necessarily do. “I think of this as another tool in our arsenal,” said Murphy.

One buyer, who spoke on the condition of anonymity, warned against overuse. “When you buy a certain category, you reach the same audience on several sites,” he said. “This is way too flashy to be running in too many places.” ShortTail’s Payne is aware of such concerns and said he’s working on frequency capping between different sites.

Still, it’s the flashiness that makes the D30 attractive. “This offers the real estate of an interstitial with more dynamic creative,” said the buyer. “It’s the best of both worlds.”

To read the whole article, click here.

Dirk Smillie, Forbes.com

David Payne, the former chief of CNN.com, says the Web is an advertising junkyard. Now chief executive of video ad platform ShortTail, he wants to clean it up by turning your computer screen into a television screen.

Web ads are still governed by rules laid down a decade ago. Boxed and bannered, they follow the in-page newspaper model. Some ads require browser shakes or mouseovers to fully engage. Most require a click. Less than 1% of web users ever do. It’s time to upgrade to a new standard by importing television’s bedrock ad unit, the 30-second spot, to the Web, says Payne. Marketers spend $82 billion on such spots annually.

The web as a field of streams? Payne is hardly alone in this vision. Other players in the video ad game include ScanScout, VideoEgg, PointRoll and Eyeblaster. Backed by venture fund General Catalyst Partners, ShortTail, based in Atlanta, Ga., ran a two-month beta test last summer and launched in October. Among recent sign-ups: Siemens, Best Buy, Toyota and Men’s Health. Will full-screen, 10- or 30-second spots beat watching Flash animations for tooth whitening and PayMyBills.com? Payne thinks so. He spoke with Forbes in December.

Forbes: You’re in the advertising business–give me your best pitch on what ShortTail is up to.

Payne: What you see right now in Web advertising is a scattershot approach of rich media and expandable ads. What we’re saying is, think about this in the third dimension. Let’s take over. Put a curtain across the site and serve a video ad. Start it with one per day per user, then move the needle up to one per session per user, or one every 10 minutes per user. Display advertising is broken. It’s not going to be fixed. Publishers should know that they’re going to be leveraged and cookied out of this business. A video ad spot is a tool that will let you play in the world of television. Advertisers spend $82 billion a year on 30 second spots. You watch them every day. They work.

Your approach has been called “deliberately intrusive”–is it?

I don’t mind that term at all. The strategy behind digital advertising now, which is to park ads on the side of a page, is not working. It’s complete and utter noise. As a user, I’d rather have a full attention, sound and motion video ad rather than 15 boxes on a page driven by Flash.

What about the notion that the Web is built for speed, and that video ads essentially freeze your screen, even if it’s for just a matter of seconds?

If you had to watch one of these per day, I don’t think there’d be an uproar. If you watched one of these every 12 hours, is that going to impact speed? I don’t think so. For marketers, it’s got all the benefits of television brand advertising with the accountability that television doesn’t have. I can tell you how many people watched it, how long they watched it and when they bailed.

Basically, it comes down to this: Do you want to pull out a credit card or watch the ad? We’ll win that question every time. At CNN we tried integrating into Paypal, integrating to a telephone or cable bill, making it easy for people to opt in to pay. They just won’t do it.

Doesn’t Steven Brill’s “Journalism Online” attempt to deal with this issue by telling people, “Pull out your credit card once, then you won’t have to again?”

Ventures like Brill’s are being launched because display advertising is never going to work. But it’s very hard to get people to pull that credit card out even for the first time. If you had a truly scalable, high-value ad in front of your content, that’s a better user experience and a better ad solution.

That spot is what’s known as the Digital 30, correct?

We originally called it the Digital 30, but I’ve pulled back from using it because people have gotten confused by it. We can traffic any video length in our player, from 5 seconds to 2 minutes. The issue is not how long the ad is, but how long you require someone to watch it before they get to their content. People can use the “immediate close” button, which is the least aggressive choice a user can make, or they can use the most aggressive, where you set the ad to 30 seconds, and people have to watch it for 30 seconds. I’m not sure the audience is ready for having to watch 30 second spots yet, but I think they’re ready for five or 10 seconds.

Technology neophytes like me need 5 seconds to find the close button anyway. But what happens when an ad runs and most of the users close it early? Do you recalibrate the value of the deal between a publisher and advertiser?

It’s up to the publisher. If Forbes were selling the ad time online it would be between Forbes and Pepsi. Like anything new, people will figure out where that line is and who bears responsibility. I imagine the site’s position is going to be, I delivered you a user, I got them to start watching the video, but your creative wasn’t so hot, 80% of the people bailed out when they started watching it. That’s on you. If the creative is good, people watch it. It will be an interesting discussion. For the first time there’s accountability on the advertiser’s side as well.

If you’re running a 30-second video spot on the Web, as opposed to television, what’s the difference in pricing?

Our CPMs are higher than cable and probably comparable to broadcast, and that’s because people have to watch the ads before they get to the content. That’s very different than television. As much as you can extrapolate from Nielsen, you really don’t know whether a person watched the ad. If you’re the third ad in a commercial pod, how likely is it really that they saw it? Moving the spot online, you have the metrics to prove they saw it. I’m not directly involved in those kinds of conversations with advertisers. But anecdotally, I know that they’re selling these campaigns in the $25 to $40 CPM.

So how does ShortTail make money in these transactions?

I take a fee for providing the hosting, serving, ad delivery and analytics for these campaigns. For $3 per thousand, we take the ad creative, test it and make sure it works, and traffic it. Its comparable to a rich media fee.

All those obnoxious ads, like watching cars drive over text, may have helped you. Compared to that, watching a five-second video is a relief to some people.

They’ve done us a favor. In the digital media business, we’ve all said yes to advertisers doing stuff like that simply because we can. The technology enabled it. No other media business works like that. On television, the currency is the 30-second spot. Then you go to digital and you could have an avatar walking across the page one way and a car driving another. Web publishers are furiously creating specialized content for advertisers, which nobody reads. Somebody calls up the editor and says, We need more traffic to the green blog because GE bought it. Forget this. You have millions of users coming to your site, yet you have a completely unscalable business. What we’re saying to web publishers is: Stop! Don’t sell some crazy execution. Sell your user.

Read full article here.

David Payne, former chief of CNN.com, has been working his start-up called ShortTail Media, which aims to help publishers increase revenue by integrating television advertising the online experience.

In beta since this summer, the company is funded by powerhouse Boston venture fund General Catalyst Partners.

Payne says that traditional display advertising is not working – as consumer engagement and rates continue to drop.

The company, an ad network of sorts,  allows publishers to insert television spots or “pre-roll” video advertising into users experience as they call up text pages to read.  Publishers can set options to close the ad at different lengths.

Now, out of beta, publishers who are currently using the platform include EW.com, iVillage.com, HuffingtonPost.com, BusinessInsider.com, and MensHealth.com, as well as blogging platforms like Six Apart (Movable Type/Typepad).

ShortTail is currently supporting campaigns for brand advertisers including Best Buy, Ubisoft, AstraZeneca, and Siemens.

There is an opportunity for ShortTail as television advertising continues to migrate online, and the existing inventory for pre-roll advertising extremely limited. But whether the business will provide a successful solution, or will turn off users who don’t want to see ads, it’s a little early to say.

Payne told me in our interview he sees this solution as the “Holy Grail” of digital media.

See the full video on Huffington Post .

This video was originally published on Beet.TV.

Adam Cahill, 

Almost every piece of content we interact with online can be thought of as a stool supported by three legs: the interests of publishers, advertisers, and consumers. The interests of the three parties are quite different, of course. But for the stool to stand, the needs of all three parties must be adequately met.

And I’d argue that we have one very wobbly leg right now.

Consumers and advertisers are in great shape. The former get everything they want, for free. The latter can deliver ads with CRM like precision at CPMs less than the loose change in your pocket.

But publishers — the party that actually creates all of the value that consumers and advertisers extract — are suffering. Assuming that we don’t want to end up sitting on the floor in a pile of splinters, that third leg must be made sustainable.

To make the stool sturdy again, all three parties must reassess their role in the value exchange, thinking in a new way about what they give for what they get. It’s a complicated, multifaceted problem. As a starting point, let’s look at one key issue for each party to think about.

Publishers and Pricing

The spread between the price of directly sold ad inventory and network/exchange ad inventory is so wide that it’s hurting publishers. Pricing may be somewhat subjective, but it has to make sense, and at the moment it doesn’t.

My favorite site (which will remain nameless) is a perfect example. If I wanted to buy the site directly I’d be quoted a $30 CPM. Yet most of its inventory comprises either house ads or placements from no-name brands that are clearly scooping up unsold space on the cheap — let’s generously assume a $3 CPM.

By holding out for a $30 CPM when buyers know they can buy the site for so much less indirectly, the publisher is backing itself into a corner. At that price, the publisher must be an absolutely perfect fit to make a plan, a once-in-a-while purchase instead of a staple.

Admittedly, I don’t know the publisher’s finances, but wouldn’t it make sense to sell many more ads at a $10 CPM to top-tier advertisers than stick with the current premium/remnant mix?

Advertisers and Interruption

Brands basically use two different communication approaches online: they run ads that talk at people, and they run social media programs that attempt to connect with consumers in a more meaningful, productive way.

The social media approach seems to have defined the ideal rules of engagement online. In other words, what brands should be doing on the Web is connecting, not advertising. And yet, advertising is important and necessary.

As The Boston Consulting Group pointed out in its recent white paper, “The CMO’s Dilemma: Can You Reach the Masses Without Mass Media?” one of the fundamental challenges facing advertisers is that the newer, more social approaches to marketing just don’t have enough scale to drive the required business results.

In addition to messages that consumers choose to interact with (which should always be an ideal to strive for), brands should also start to get comfortable with the idea of delivering advertising online that we can ensure consumers will see.

With the beta launch of ShortTail Media’s D30 ad unit earlier this week, we’re seeing a move toward an interruptive online ad model. As advertisers, if we want to have healthy publishers and the ability to reach large audiences in an impactful way, it’s an approach we need to embrace.

Consumers and Payment

The content we all enjoy online feels free, but it isn’t. One way or another, we need to pay for it, whether that’s with our time or money.

My guess is that the vast majority of us would rather endure an interruption of 5 or 10 seconds than pay a subscription for our favorite content. To date, consumers haven’t been required to make many sacrifices online, but that has to change if we’re going to keep getting the quality content we’ve become accustomed to.

It’s tradeoffs all around. More realistic pricing from publishers. An acceptance from advertisers that sometimes we actually need to interrupt consumers if we want their attention. And consumers must sacrifice a bit of their time.

There will no doubt be bumps in the road, but over the long term we’ll ensure a business model that works for everyone. Maybe not perfectly, but better than it does today.

Read Full Article Here

A new ad unit is making its way into the cybersphere, and it ain’t a subtle one either. While most marketers have been upholding user experience front and center in their media strategies, US-based ShortTail Media CEO David Payne is calling for deliberately intrusive placements, urging the industry to adopt bigger, bolder creative in the form of 15- to 30-second full-page video ads that load between page browses.

The new standard video ad unit for the Internet, called the Digital 30 (D30), would be sold differently too – much like TV, ultimately shifting online advertising currency away from banner ads sold on bulk impressions, to video ads sold on limited inventory.

According to a number of industry publications this week, Payne, who was formerly head of CNN.com, recently met with top web publishers in the US in the hopes of getting them to commit to testing the new ad format, which will be out in beta as early as this summer. So far, Reuters has signed on, and MSNBC.com and Weather.com are also said to be considering joining the test.

While ShortTail promises to “frequency cap” the ads so users don’t get inundated (spots will also have a skip button that appears after 10 seconds), some argue that throwing up TV commercial roadblocks will only frustrate users.

Payne’s argument? The main reason web publishing revs haven’t been able to fully replace print revenues is that the standard web ad – the banner – is too easy for readers to ignore, and can’t convey a brand message nearly as well as a glossy magazine ad, a newspaper spread or a TV commercial.

It’s hoped that the new ad unit could set a precedent for better creative as well. In a recent interview with Mediaweek’s Mike Shields, Razorfish’s national media discipline leader Sarah Baehr says if adopted widely by publishers, the D30 could inspire a creative revolution. “I hope that clients invest in creative,” she said. “You don’t want bigger, [lousier] creative.”

Read Full Article Here

Kristina Knight, Biz Report

Bob Keyser, SVP of Schematic, ShortTail Media’s partner in the platform. “This is the first broad scale platform to offer easy integration of high-quality video ads into premium, non-video environments. By requiring a minimum 10-second view of the spot, the D30 delivers a higher rate of viewer engagement than standard display ads that are often skipped or overlooked.”

The platform does not interfere with existing pre-roll or display ads.

By considering the fact that video viewers are also reading content to get to the video, performing searches and even reading news clippings or headlines prior to viewing, the platform gives marketers the ability to monetize these ancillary aspects of online content.

“We’re marrying what has traditionally been the most scalable and sell-able of offline ad units – the 30 second spot – with online websites, in a move ultimately intended to replace the banner as the standard,” said David Payne, CEO of ShortTail Media and the former head of CNN.com. “By focusing on both user navigation patterns and on what actually works for advertisers (video advertising), we’re solving a critical marketplace shortcoming.”

According to new data from Nielsen Online, more than 116 million US consumers watched online video in April. The report shows that these users initiated more than 80 streams each and spent more than 200 minutes watching video clips.

Read Full Article Here

Ad Networks and Analytics:

• FetchBack launched FIDO 2.0, a tech platform that hosts analytics remotely. Users can access campaign reports, review and update their campaigns.

• Sorenson Media launched Sorenson 360, an internet video delivery network that enables users to easily publish and produce high-quality online video. Rates are intended to appeal to small- and mid-sized businesses.

• The digital :30 spot is on its way, courtesy of ShortTail Media and its beta pool for Digital 30 (D30).

• The Gay and Lesbian Alliance Against Defamation (GLAAD) launched its Advertising Media Program, a network for advertisers and publishers seeking to target the gay community.

• Epicenter Network launched DM2.com, a free website builder that lets users build and integrate text, display and CPA ads. It also pays a revenue share for business generated through these sites, and incorporates sites in an affiliate network.

• Publicis’ Starcom MediaVest has launched the SMG Exchange (SMGX), a media buying entity that will incorporate digital data, marketplace intelligence and “as-yet-undisclosed” elements into its buying proposition.

Read Full Article Here

Beyond the money they provide, one of the benefits of venture investors is the network of connections they can offer an entrepreneur.

In an example of those connections leading to a fruitful deal, two General Catalyst Partners portfolio companies recently found a way to work together. ShortTail Media Inc. has developed a new video ad platform that leverages Visible Measures Inc.’s patented video measurement technologies.

ShortTail’s team actually discovered Visible Measures when its recent funding was in the news. General Catalyst helped connect the two companies and they found a way to work together. Payne then started looking within the General Catalyst portfolio to see if other relationships could be formed.

“There are other cases we’re talking to other portfolio companies on how we can work together,” ShortTail Chief Executive David Payne said. “That’s going to be a common theme.”

ShortTail received an undisclosed Series A round from General Catalyst last May. Visible Measures recently raised a $10 million Series C and has raised more than $29 million from General Catalyst, Mohr Davidow Ventures and Northgate Capital.

ShortTail Media has teamed up with Schematic, a WPP Digital company, and Visible Measures to develop an ad unit that launches a video when a user clicks on a site to read a story or view pictures. Known as the Digital 30 – or D30 – ShortTail’s platform provides a way for advertisers to distribute their existing 15- or 30-second spots across a network of Web sites. The D30 platform serves video ads as users navigate to sites from search or headline links, creating ad inventory that does not compete or interfere with existing pre-roll video or display ads on partner Web sites.

By leveraging Visible Measures’ analytics, the D30 platform will show advertisers how long users actually engaged with their advertising. The D30 will launch its beta program this summer with select publishers and advertisers.

Schematic helps deploy Web, mobile, television, digital environments and emerging platform technologies to advertising clients. Schematic offers complete strategic, creative, marketing and technology services to Fortune 1000 companies, including Target, Microsoft Corp., Dell Inc. and Nokia Corp.

Based in New York with an office in Atlanta, ShortTail works with more than 50 online publishers whose offline media properties include broadcast TV, cable TV, newspaper and magazines. The company was founded last year by Payne, the former general manager of CNN.com, and Jason Krebs, former vice president of Conde Nast Media Group-Interactive.

If ShortTail Media has its way, your Internet browsing will soon be interrupted by 15- to 30-second video ads. AdWeek reports that the company’s Digital 30 (D30) is a “deliberately intrusive” ad placement that loads as you browse between web pages.

The idea, of course, is for publishers to make more money by shifting ad dollars away from banner and other display ads that are sold in bulk to the more expensive video ads. Reuters has signed up for the service, and MSNBC.com and Weather.com are reportedly interested as well.

If that sounds awful to you (and it should) well, too bad. Earlier this year, ShortTail CEO David Payne gave a speech at the Interactive Advertising Bureau’s annual meeting, saying publishers need to be less sensitive to user experiences (though he does promise frequency capping the ads so users don’t get overwhelmed).

We understand the need for publishers to increase revenue, but the web is built for speed.

Throwing up mandatory TV commercial roadblocks will only agitate, frustrate and ultimately impede the ability of workers to get things done. According to a comment over at Silicon Alley Insider apparently left by ShortTail President and co-founder Jason Krebs, the spots will have a skip button that appears after 10 seconds. (Ten seconds is an eternity when you’re on deadline.)

ShortTail is working with Visible Measures and WPP’s Schematic on the D30 video ad platform, and plans to launch the beta program this summer.

Read Full Article Here