Keystream Nabs First US Customer

Written by Ryan Lawler

Wednesday, February 18. 2009 at 04:25 PM EST 3 comments

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Online ad company Keystream Corp. has nabbed its first customer, with the announcement yesterday that science and technology site RedOrbit would use its video ad insertion technology.

Keystream's SmartAd technology works by placing Adobe Flash-based advertisements directly into publisher videos. The technology first scans the video, looking for "non-obtrusive" blank space to put the advertising. Then, when users view the videos, the ads are dynamically inserted into those areas.

Keystream claims that, unlike traditional pre-roll or overlay advertisements, their ads aren't disruptive to the viewing experience. At the same time, Keystream says that engagement rates for its ads are much higher than other ad formats, which users have learned to ignore.

Keystream co-founder and president of research and development Ed Ratner says that initial trials of the company's technology show interaction rates of about 20 percent, with click-through rates of about 5 percent. He says that compares with click-through rates in the range of 0.05 percent to 0.1 percent range.

"If you always know what's going to appear, you learn to ignore it," Ratner says. Keystream's technology, by contrast, can show different ads in different spots of a video every time a user watches it.

While Keystream's pitch is intriguing, the company may have difficulty in scaling up to meet advertisers' needs. While publishers need only to insert new code into their video players to enable Keystream ads, the new ad units mean that agencies must come up with new creative if they want to use Keystream's technology.

Keystream CEO Schuyler Cullen says the company has seen a positive reaction from video publishers. But Keystream is still in the process of educating advertisers and agencies about how the technology works. 

"In general, what we've noticed is that publishers are very eager to get on board. What we're doing with publishers is starting to pair them up with early partner advertisers," Cullen says.