• by Wendy Davis , Staff Writer @wendyndavis, February 20, 2008

Video ad network VideoEgg said it will implement a new pricing system that charges marketers only when users initiate an ad and watch it for a brief time. Previously, the company sold ads on a cost-per-thousand impression basis.

Microsoft is testing the new ad system with ads for Office in a four-minute video featuring comedian Amy Sedaris.

VideoEgg plans to charge advertisers up to $1-per-interaction for the new format, though Microsoft is paying less than 50 cents, according to some press accounts.

The company's Chief Marketing Officer Troy Young told TechCrunch that between .5% and 9% of users mouse over and interact with the ads, which would mean that the cost-per-thousand impressions could theoretically reach $90. Previously, VideoEgg charged CPMs of around $10, according to TechCrunch.

While VideoEgg's new model seems to bring some of the same accountability to video ads as pay-per-click systems, unless the video ads direct users to an e-commerce site, it will likely be far more difficult to calculate what proportion of those who click make a purchase than with many paid search ads.

In other words, figuring out return on investment isn't likely to be any easier for marketers with VideoEgg's new pricing plan. And, given that the site is talking about what potentially amount to very high CPMs, it's not clear that marketers will embrace VideoEgg's new model any more enthusiastically than its old one.