• by Laurie Sullivan  @lauriesullivan, November 19, 2007

Crackle's noise-making effort to pair digital content with sponsored target ads is working. The online video site from Sony Pictures Entertainment, formerly known as Grouper, focuses on high-definition media content from emerging moviemakers. The new business model that launched in mid-July has apparently caught the attention of executives at influential brands.

Pepsi, Honda, Epson, Sony Electronics, Vodafone and others will ride the coattails of Sony's multi-platform syndication network across Internet Protocol TV (IPTV) through Bravia, Sony devices, social networks, and partnerships with video network sites Bebo, Hi5 and Piczo, among others.

Companies have increased interest in branding products and services alongside video partners, especially during the past six months. "Our player gets embedded onto the pages of partner video sites--so not only do you get served-up video ads and content, but in the skin of the player you see the Honda logo that proudly presents the Shorts Channel," says Mike Sitrin, vice president/partnerships at Crackle, Sausalito, Calif.

The brands are reaching for a piece of the online video market that research firm eMarketer says will have 183 million viewers in 2011--up from 114 million in 2006. By 2011, 86.6% of the U.S. Internet population will view online video--up from 62.8% in 2006. eMarketer also expects that spending for online video advertising in the United States will reach $4.3 billion in 2011--up from $410 million in 2006.

Sitrin says Honda wanted to align the Honda Fit brand with young filmmakers, so they sponsored the Shorts Channel. It ties into a Columbia Pictures' contest that, rather than giving the winners money, offers emerging moviemakers a chance to pitch projects to executives at Columbia Pictures. The promotion began in October and runs through the year.

Since July, Crackle has funded about 20 movies for emerging artists. Brian Dalton's popular "Mr. Deity" series, which has racked up more than 6 million views, demonstrates the success of a video shot and encoded in high-definition technology funded by Sony's Crackle.

Marissa Gluck, founder and managing partner at Radar Research, which follows the entertainment industry, says studios were "hoisted by their own petard," taken back by consumers' love for amateur videos after the networks began running an onslaught of reality TV shows. The move, however, created an appetite for both amateur and high-caliber cinematography.

For moviemakers, Crackle gives creators of high-quality digital movies access to brand sponsorships and entertainment-industry leaders from visual effects and animation house Sony Picture Imageworks, Sony Pictures Animation, Sony Pictures Television, and Columbia Pictures.

Honda Fit took the lead sponsorship for the Shorts Channel, which airs short films. The company will integrate into the channel using a full screen and video playlists from top new filmmakers. The move combines a humorous attitude with whimsical films.

Epson also plans to run a campaign across Crackle on various channels with video and banner ads. Pepsi's branding appears on the Minisode Network channel's home page, along with custom video and banner ads that run across the site. During the next few weeks, Pepsi's packaging is sporting a retro look, featuring a variety of Pepsi logos from the past 100 years. Pepsi printed the site address throwbackpepsi.com on each can, directing consumers to Crackle's Minisode Network channel to view classic TV programs.

As for Sony Electronics, Crackle enables its HDNA marketing campaign to post branded content with digital watermarks on select Crackle HD content. The watermarks aim to curtail piracy. The integrated marketing campaign that includes Blu-ray, Sony Handycam camcorders and Bravia TVs will stretch across Crackle's highest-quality videos.

Crackle works with agencies and advertising networks such as 24/7 Real Media, Adconion and Ozone Media, who sell across the United States, Europe, Australia, India and Canada. Entertainment industry executives say growing video penetration and demand for U.S. content in India and Mexico has fueled interest.

Today, Crackle's business model focuses on content sponsorships, contests and banner ads. That will change as discussions continue with advertisers to insert brands into the video content.

Paul Verna, senior analyst at eMarketer, says: "Whether Sony can make a substantial profit from this type of operation is still an open question--but it may not be the most important question for Sony to answer. Because of the diversity of its portfolio, Sony might be less interested in a site that's profitable on its own than in driving business to other Sony properties. In this regard, a site like Crackle can help by acting as a talent incubator."