Last month, popular Internet voice and chat service Skype rolled out display advertising in advance of its planned IPO. The offering is a pushdown-style unit in the "Home" tab of Skype for Windows, with ads appearing in the U.S., U.K. and Germany to start. As part of the launch, the company also partnered with Meebo to sell advertising for Skype in the U.S.
With 145 million average monthly users across the globe, the service has enough potential reach to intrigue marketers. Already on board are major brands, including Visa, Universal, Nokia and Groupon. But how will all those users accustomed to ad-free Skype software respond to high-impact home page ads?
Online Media Daily met up with Skype CMO Doug Bewsher to ask about that and other aspects of the company's new ad push. Prior to joining Skype, Bewsher was CMO at Singapore-based mobile social network Mig33, where helped double the number of registered users to 40 million. Prior to that, he held various marketing positions including heading the San Francisco office of digital agency Publicis Modem.
OMD: Can you give a quick rundown of Skype's new display ad offering?
Bewsher: This is obviously our first step into advertising. What we're offering is a premium home page, masthead advertising space. It's 650-by-170 [pixels] and expandable down, but it doesn't auto play. We could make it auto play, but what's really important for us is to understand how it impacts the user experience. So we're actually testing different ways to do things to see how the engagement is with advertisers, as well as the consumer response. We're going to experiment, but as we go forward we're going to do what's most complementary to the Skype experience.
OMD: Given that Skype is a communications tool, is alienating users with advertising a particular concern? Has there been any backlash?
Bewsher: We took two years doing research. We definitely haven't seen a backlash on it. Generally, people have said yes -- we understand that by doing advertising you can continue to invest in building out the other products, either group video calling or Skype on the iPhone or what we're doing on the enterprise side. People get that if you're not paying- -- unless you're using SkypeOut -- there's a trade-off between advertising and utility. What we have, and we're offering at the moment, is also something that isn't in the conversation. It's in that space between conversations.
OMD: You've signed up some big name brands at launch. What kind of response are you getting from advertisers?
Bewsher: What we're seeing is quite a lot of engagement from marketers that have a launch and want to get the word out quite quickly -- to movie studios, cars. They're looking for the broad kind of reach that Skype can give, but with rich media branding. We measure engagement metrics, so we're looking at our video completion rate, and with some of these ads, we're seeing a 90% completion -- very good compared to typical benchmarks. The response from advertisers is actually above initial expectations and several of our advertisers have even already re-booked with us.
OMD: Visa has an interesting ad. Can you talk about that as an example of what advertisers are doing on Skype?
Bewsher: A lot of people don't know that you can use your Visa debit card to take out cash from an ATM. And what Visa saw with Skype is that a lot of people use it because they're international, especially in the U.S. A lot of people who use Skype have international friends; they travel a lot. So they're connecting with that audience to say, "When you're abroad, why don't you use your Visa debit card to take out cash?" And then it's an interactive unit that shows you where ATMs are locally. They're trying to get the international set that uses Skype to relate to Visa.
OMD: What's been the reaction among agencies?
Bewsher: In terms of us talking to creatives, we have a big benefit in that almost everyone uses Skype, and we have a very strong love of the product. That opens the door for a lot of conversations. But they still are asking: "How do I make the most of this?" This is actually the first advertising we've launched within the U.S. One of the things we're seeing working with advertisers in the U.S. is that they're really trying to think quite creatively about how to use the tools that Skype offers in different ways.
OMD: How do you position Skype compared to other online social platforms or chat tools?
Bewsher: Just so you're clear on how this is sold, at the moment, it's a daily takeover. And if you look at the amount of time somebody is spending in Skype, they're spending on average a month, an hour and 28 minutes. And you've got Facebook out there at something like 6:56. But with a very basic advertising unit, it's hard to be dramatically creative there.
Then you've got YouTube at the other end -- you can be really creative, but you've got very limited time for engagement. So you've got Skype in the middle -- where people really get engaged -- but at the same time, you can do something creative. Our term for this is the "creative engagement gap." So as a brand, when you think about a lot of time spent and a lot of engagement, what can you do with that? I'd love to solve that problem.
OMD: How does advertising fit into the overall revenue picture for Skype?
Bewsher: We want to make sure that we have different monetization streams. We launched our premium group video call offering, which is now a subscription-based service. .. and on the enterprise side, we just signed a deal with Citrix. We have Avaya as a reseller, so we're pushing hard on really positioning Skype in the enterprise as well. It's important for us to have multiple revenue streams; it's not going to be one size fits all.