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Summary:

Zadby, a Reston, Va.-based startup, has been flying under the radar while developing a product for advertisers to commission viral video ads. The company has retained about 200 top video independent producers, it says, and offers them deals to make commercials on spec for its customers. […]

Zadby, a Reston, Va.-based startup, has been flying under the radar while developing a product for advertisers to commission viral video ads. The company has retained about 200 top video independent producers, it says, and offers them deals to make commercials on spec for its customers. If their video is chosen, producers receive a $1,000-$3,000 budget plus a CPM rate. Zadby takes a 20 percent cut.

The twist is that video producers release the ads on their own YouTube, AOL or MySpace channel — in other words, where they’ve already built an audience.

The problem is, Zadby relies on the existence of a creative class that makes videos for the love of it, and might be interested in making some money off of the work, but not enough to seek out a better deal. “The model isn’t geared towards them,” Beau Brewer, Zadby’s general manager, told NewTeeVee. And that doesn’t sound terrifically sustainable.

Zadby’s advertisers get final approval on ads before they go live or anyone gets paid. If an ad isn’t chosen, its producer wouldn’t have the right to use the advertiser’s images — so all that work would go to waste.

The company has had one successful trial with Polk Audio, for which it commissioned ads with a $2,000 budget and received some 310,000 views, according to Brewer. The most popular one is embedded above.

Zadby has $400,000 in funding from its founders, who run the web development shop Siteworx. The young company’s CEO, Michael Buttrey, left in June for undisclosed reasons. Competitors include XLNTAds and StudioNow.

  1. Hi Liz,

    I’m sorry that this is the message that you took away from our discussion. We are working round-the-clock to make Zadby a successful marketplace for both sides of the equation and we’re pleased to have garnered the attention of a great blog like NewTeeVee.

    At the same time, I’d like to respectfully express my disappointment at the direction of your article.

    I’ll be the first to admit that our early efforts have been focused more heavily on recruiting advertisers to the site; however, I would argue that this temporary phase is in both the best interest of Zadby and our producers. Advertisers inject money into the marketplace–without which there is no marketplace. Both the producers and Zadby make money based on our successful business development efforts, and as you noted, the producers take 80% of the funds.

    My comment about producers publishing videos “for the love” was in reference to the existing, broken marketplace, where the top online producers’ only hope at monetizing their fantastic product has been a stingy revenue share from the video hosting site (which, believe me, does not approach an 80/20 split in favor of the producer!) or that their online work will get them hired for traditional production jobs.

    Or producers can enter contests where the results are arbitrary and payout is binary. The contest model is a popular today, but it doesn’t seem like good ways to make money for the video producers who are creative and talented enough to attract loyal audiences in the millions. Can you imagine if the only way that television shows could make money was by winning an Emmy?

    Your article alludes to “better deals” that producers can find elsewhere and mentions a couple competitors. I wasn’t able to find any current work for producers on either site you mentioned, nor was I able to find a transparent disclosure of the cut that those businesses are taking. I’m always looking for competitive intelligence, so I think it would be equally enlightening if you could share with your audience the revenue share percentage that these sites are offering.

    For Zadby, we’ve compared our offering to traditional advertising models, where the in-house creative is treated as a cost which certainly would never approach 50% let alone 80% of an advertising budget.

    To address your last point that advertisers have final approval of the use of their brand, unfortunately that’s a legal reality. It would be asking a lot for a small startup to change laws governing copyright and intellectual property. I think the more relevant point is that in our case study, the marketing department at Polk Audio was, for lack of a better term, “pretty cool” about approving an edgy submission. And the results have been fantastic. So far, Zadby has a 100% approval rate for submitted videos, and it’s in our best interest to keep it that way.

    The bottom line is that Zadby only makes money if our producers make money, far from a one-sided deal.

    Best regards,
    Beau Brewer
    General Manager
    http://www.zadby.com

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  2. Hi Beau, I was referring to more lucrative deals that top producers can score on their own — for instance, “Fred” and Zipit (http://newteevee.com/2008/06/25/fred-speaks-to-ntv-squeaky-voice-not-included/) — without such an intermediary.

    I agree with you that contests can be a racket, but I think what you’re doing isn’t terrifically different if there’s still the chance that a completed video one of your producers made has the chance of not being picked and never resulting in any money.

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  3. Liz, nothing is sure but death and oil prices. I think that the zadby.com model could work. There are thousands of video bloggers who make good, bad and indifferent videos anyway, so what is the harm if there are given some copy and creatives with which to work?

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