Courtesy of Vertebrae

Hate obstrusive online advertising? Then imagine how you’d feel if those ads were literally in your face, playing on a virtual reality headset with no chance to look away.

Santa Monica-based VR advertising startup Vertebrae officially launched Wednesday with a promise to do things differently. Vertebrae won’t use banner ads or traditional pre-rolls, said its CEO Vince Cacace, arguing that a lot of online advertising already doesn’t work. “It’s a nuisance,” he said.

Instead, Vertebrae is helping advertisers to develop interactive ad formats that work well in the context of VR. Part of that is to make content that is interesting to VR users, argued Cacace, but pairing advertisers with the right publishers is just as important, he said.

One example for this is a campaign that Vertebrae has quietly been running already: “Sisters,” a horror VR experience from Otherworld Interactive recently added a VR trailer for Lionsgate’s “Blair Witch” remake.

“Sisters” is available for Cardboard-based headsets using iOS and Android phones as well as Samsung’s Gear VR, and Cacace believes that mobile VR is where advertising will flourish the most. Gamers who spend $800 on a VR headset don’t expect to see advertising, he argued. Owners of cheap or free mobile VR headsets on the other hand would be much more willing to look at ads.

Vertebrae currently employs 13 people, and recently raised $10 million in funding to further grow its staff and build out its technology. The long-term plan is to eventually build a scalable programmatic ad network for VR advertising.

But to get there, Vertebrae and others in the industry first have to agree on how to actually measure ad engagement and effectiveness in virtual reality, which is why the company is part of an IAB working group for VR and augmented reality advertising.

Having effective advertising in VR may also require the industry to come clean about some of the hype that’s currently surrounding the medium — which includes being honest about its audience size. “VR has been so mystical and fairy dusty,” said Cacace.

The reality is that it may take some time before brands reach big enough audiences to warrant significant ad budgets. That’s why Vertebrae is also helping advertisers to produce 360 videos, which can then also be distributed on Facebook and YouTube. “360 is like a gateway drug,” said Cacace.

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