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Focus Ventures led the funding round, with WPP, August Capital and Maveron also contributing.
VideoEgg, which delivers video advertisements across many popular social-networking sites, such as Bebo, Hi5, Flixster and Facebook, plans to use the capital to grow its advertising network business and accelerate product development efforts, including innovative ad formats and targeting. It will also explore the most effective ways of leveraging social networks to build brands.
"The social net continues to take time and attention from traditional media, especially in youth segments," said Matt Sanchez, co-founder and CEO of VideoEgg. "We think traditional ad networks are not meeting the needs of brand marketers who are looking for viable alternatives to TV advertising. This funding will help us to continue to build the next generation ad network and make advertising more social, moving away from creating an impression to securing an actionable brand engagement."
VideoEgg also pointed to figures from IDC, which identified internet advertising is the most important sector of the digital marketplace and estimated that it would grow to $31.4 billion by 2011.
The firm's advertising partners include Universal Pictures, Discovery Networks, Electronic Arts, Ford, Nike, Unilever and Nestlé.