Joost Tinkers With Ad Model
Joost announced today that it has signed on a number of top-flight advertising partners to go with the growing number of content providers clambering to offer free content over its peer-to-peer streaming media service.
Joost named 32 advertising launch partners, including names like Intel Corp. (Nasdaq: INTC), Microsoft Corp. (Nasdaq: MSFT), Coca-Cola, GM, and Visa. (See Joost Names Partners.)
"It's a pretty impressive list," says In-Stat analyst Gerry Kaufhold.
But what's unknown about the Joost business model is just as intriguing. Joost senior VP of North America sales Brad Elders says the company will charge advertisers based on when and how many times an ad plays. But the company is not yet clear on how it will price advertisements. It's also unsure how exactly it will reach specific users with specific ads, which is thought to be a key advantage of IP-based video delivery.
"We're still working with partners and advertisers to come up with appropriate pricing models," Elders tells Light Reading.
As Google's success has shown, the ability to target specific users with ads, based on audience demographics or usage statistics, is universally appealing to advertisers. But Joost says it has no specific plans for that type of service yet.
"We're considering a number of alternatives," Elders says. "We're still in beta now, working with a limited number of users, but as we scale up, we should have a better idea for how we're going to go about this."
So what is Joost doing?
To start, it is working with Frank N. Magid Associates to measure user consumption habits and advertising effiency for its partners. That will start Joost on a course of making sure its advertisers aren't just wasting time, analysts say.
"The key for ads is to report usage back to advertisers to see what shows and what advertisements were watched," In-Stat's Kaufhold says.
Since January, Joost has built an impressive list of partners on both the advertising and content sides of its business. (See Joost Brand Unveiled and Skypsters Fast Forward to Internet TV.) Among the most talked about is its deal with CBS Corp. (NYSE: CBS) and Viacom Inc. (NYSE: VIA) to offer HD-quality video for free. (See CBS Gets Joost, Joost Signs With Viacom, and Joost Signs Agreements.)
While its plan to make money is still a bit cloudy, Joost is still an interesting option for advertisers because of its TV-like delivery. "The Joost approach means that the user is tied to the Joost application, which creates a walled garden," Kaufhold says. "The walled garden appeals to content providers because they can protect their content. And it appeals to advertisers, because they can better target users."
— Ryan Lawler, Reporter, Light Reading