The Skinny on SpotXchange’s SkipIt: Why Pay to Skip Video Ads?

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ADOTAS – One of the more head-turning releases demoed on the floor of this week’s ad:tech conference in San Francisco was video ad network SpotXchange‘s SkipIt service, which allows viewers to skip video ads, for a fee — basically, 10 cents per skip right now, plus one bonus skip for each dollar the user drops into his or her account, and the company says later in the year it’ll be rolling out the option to skip ads in exchange for social shares, participation in a survey, coupon downloads and the like.

SkipIt’s seen so far its share of supporters and detractors alike, and the controversy, such as it were, probably arises from the fact that it kind of subverts the internet’s accepted business model: With the rare exception of a paywall  for some sites, there’s no need to pay for access to content, or, for that matter, to avoid exposure to the ads that we see (the very ads that make it possible for websites to operate on something other than, say, a subscription model). And on YouTube, the TrueView (i.e. “skip this ad in x seconds”) tool is all over the place. How is the act of paying to bypass an ad supposed to be something viewers are going to want to do?

To SpotXchange CEO Mike Shehan, it’s partly a question of scale. “We know people like to skip for free,” he said. “When [TrueView] first started, skip rates were, like, 30 percent. Now it’s 70 percent, up to 80 percent.” But the TrueView technology isn’t universal — it’s YouTube’s technology, and there are a lot of publishers out there other than YouTube that host video — and it’s not consistent within YouTube, even. “Sometimes it’s not there,” Shehan said, “and the reason is, the advertiser has to buy it.” As Shehan explained it, if there’s that much desire to skip ads, there’ll be enough people willing to pay to skip ads that the few cents at a time the advertiser earns from skips will make SkipIt financially viable. “I think this really only works, from a scale perspective, when you’re one of the most popular brand websites out there,” he explained.

Shehan said there’ll be other options for SkipIt users, including some that address the assumption some critics have made that you’d have to stop and enter your credit card information upon the initial signup (not necessary, say SpotXchange reps — you can sign up and straightaway collect free skips, and add to them if you refer your friends to the service). Already users can use a social login to access their SkipIt accounts, which presents some opportunities for brands and to interact with users. “Say I’m a high school kid; I don’t have a credit card,” Shehan said. “Sure, I’ll ‘like’ the Toyota Facebook profile for five skips.” Unlike TV advertising — which Shehan called more or less analogous to the current pre-roll format — there are opportunities for more of a user/advertiser back-and-forth online. “Let’s create some feedback loop and create some level of choice,” he said.

Basically, Shehan said, SkipIt presents an option, suitable for a certain kind of publisher, that hadn’t been present before, and it’s one that he explained is designed to take the onus off advertisers a bit. “You don’t fix the problem of abandonment by putting it on the advertiser,” he said. “Our thought is, you give [the option] to the publisher. You have that consistency” — meaning the SkipIt tab in the corner of every video player on the site, as opposed to a TrueView-like system where the “skip” tab isn’t always there. “To me, that’s a better way,” he said.

The thing is, though, as some have pointed out, there are already platforms that allow viewers to skip ads without paying anything. About a month ago, Solve Media, which made its name by providing alternatives to CAPTCHAs that involved users typing in a branded message, announced a way for viewers to pre-empt pre-roll ads by entering a brand’s tag line or slogan. For over a year longer that that, blurbIQ has allowed viewers to skip ads by answering brief questions about the brand or the ad itself. Shehan points out his company isn’t necessarily trying to compete with other ad-skipping services (SpotXchange has worked with Solve Media, he said: “They’re really good guys. They’re smart”). “It boils down to choice,” he expained. “They’re all trying to solve the same problem — get to the content faster. All of our solutions have always been advertiser-centric. It’s a consumer service, establishing a relationship with the consumer — just one click, done.” If anything, he said, those other companies’ efforts “confirm that the… elephant in the room is that people want to skip ads.”

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