In a major development in the way advertisers pay for advertising in video ads, VideoEgg has launched a new performance-based advertising system called AdFrames.

One of the first advertisers to sign on is Microsoft, which is advertising new features in Office 2007.  Instead of paying publishers for the number of views, Microsoft is paying VideoEgg fifty cents per views, reports Brian Morrissey in Adweek.

The innovative San Francisco-based online video network, which first introduced overlay ads, also manages advertising on a cost per impression or CPM basis. 

We are delighted that the folks at VideoEgg are moving the industry past the CPM model.  After all, the engagement of watching video is much more valuable than a banner ad on a page which we largely ignore.

Troy Young, CMO of VideoEgg was at the Beet.TV broadcast center today for this interview.

— Andy Plesser