Web video is taking off. Advertisers just need the right vehicle - and there are a slew of companies promising results.
The hot new opportunity in Web video is to be a matchmaker. More than a half-dozen companies are jockeying for position to become the leader in pairing ads with video content, in what is fast shaping up to be the new gold rush in Web video.
In the last few months, a host of online video firms - some specializing in search, some in content and some in technology - have extended their business strategies to begin matching ads to relevant video content.
The opportunity to help marketers reach consumers watching Web video is huge. A July study from The Pew Internet & American Life Project found that 57 percent of Americans have watched online video and 19 percent do so each day. Meanwhile, ad dollars flowing into online video should hit $775 million this year and jump to $1.3 billion next year, according to market research firm eMarketer.
That's why Blinkx, YuMe Networks, Magnify, Digitalsmiths, Adap.tv, Pluggd and others are scrambling for a leading role. This latest rush follows the pattern in online video over the last two years. First, there was a race to provide the tools to TV networks to deliver their video, with firms like Brightcove, Maven Networks and thePlatform emerging as leaders. Then last year, video search engines started jostling for dominance, a race that is still being run with participants ranging from Google to AOL-owned Truveo to Blinkx. Now, companies are clamoring to deliver ads with video.
That's because marketers need a means to separate the wheat from the chaff.
"There is a tremendous amount of content, but a dearth of good content," says Jayant Kadambi, CEO of YuMe Networks. To help advertisers navigate their way through the morass of Web video, YuMe searches video and only pairs advertisers with contextual and appropriate content. "They want to know where their ad is going. We can tell them what's in that video."
YuMe Networks strikes deals with both advertisers and publishers to
deliver ads across Web sites, mobile phones and peer-to-peer services. Earlier this year, YuMe partnered with game publisher Eidos Interactive to deliver ads in the programming from cable network G4
running on BitTorrent's peer-to-peer service. YuMe also recently handled an online campaign for the History Channel show "Digging for the Truth" and has run campaigns for brands
including Marriott, Clorox, Cherry Coke, Qantas, Lionsgate and Blockbuster. YuMe's ad formats include traditional ads such as pre- and post-roll, as well as interactive overlays, watermarks and
YuMe is one of the few companies that has a track record so far in this new business, albeit a short one. That will help YuMe as it continues to square off against a hornet's nest of competition.
But it will face some high-profile sparring partners. Video search engine Blinkx is aiming for a stake in the ad targeting business. Blinkx has indexed more than 12 million hours of audio and video content on the Web. Given its expertise in video search, the company launched AdHoc this summer, designed to be an AdSense for Web video.
AdHoc matches ads to video content by leveraging Blinkx's existing search technology. Blinkx relies on text and visual analysis to produce its video search results; it uses those same tools to pair ads with video, ranging from pre-rolls to banner and text ads, said Suranga Chandratillake, CEO of Blinkx.
"Pre-roll ads are an attempt to take what works on TV and use it in online video," he says. "Banner and text ads are an attempt to take what works in search and apply to online video. Both work okay, but no one has come up with what will work with online video and that's where people are trying to figure out a new model."
Blinkx is currently testing AdHoc with a small number of media companies and is planning to introduce new features this fall. If a viewer watches a video on touring the wine country, for instance, the system would deliver an ad that's either geographically, demographically or contextually relevant.
Video search service Digitalsmiths is also testing ad targeting. Its VideoSense search service operates as a plug-in, letting media companies add the capability to an existing video player, for instance. Digitalsmiths then analyzes the audio and video to match ads to content. The key is to analyze both the audio and video, says Ben Weinberger, the company's CEO.
"Without [analyzing] the video, you are missing over half of the story," he says. "Imagine times in the video when there is little to no dialogue. A content owner is missing a large opportunity to monetize their video if they rely on an ad network that only analyzes the audio stream."
Digitalsmiths provides tools to match video to ads, but it doesn't bill itself as an ad network. Instead, Weinberger says he's talking to online ad networks about incorporating Digitalsmiths into their existing businesses. The company is also testing a technology to ensure video is brand-safe for an advertiser. "We don't want an advertiser's brand to show up somewhere they find inappropriate," Weinberger adds.
Adap.tv has already gained some market share in this new business, following its May launch. Adap starts with the premise that consumers don't like watching 15- or 30-second pre-roll ads before their online video. Instead, the company matches online video with short, contextual ads that appear as an overlay from publishers like Amazon, Yahoo and LookSmart. A viewer can click on the ad to link to relevant products on Amazon, for instance. Sites using Adap.tv include Metacafe.
"We offer an easy way to get into online video and get exposure with a granular and accurate message," said Amir Ashkenazi, CEO of Adap.tv. For instance, Adap might pair an online video on Italy with DVDs and books from Amazon about traveling to Italy.
Google-owned YouTube is also looking to play in video ad targeting. The country's largest video-sharing site introduced overlay ads with its partners earlier this summer.
Online ad networks want a slice of the pie too. Broadband Enterprises, which has focused on delivering a range of Internet ads from 150 advertisers to the 2,000 sites in its network, extended its technology to now include video.
Then there's online video technology firm Magnify.net. It has carved out a spot as the platform for niche online video communities, such as enthusiasts of radio-controlled cars. Now it plans to match ads with those videos.
Another new entrant is Pluggd, which is peddling its technology to media companies and video sites. The company's search technology combines speech recognition with semantic analysis of the video content. It then locates the portion of a video that best corresponds to a user's search and overlays a targeted ad, letting users jump to the exact section of the video they are most interested in. "It really allows people to search within the video and navigate. We are seeing a dramatic increase in the amount of videos consumed," says Alex Castro, CEO of Pluggd. When a site adds Pluggd technology, the time spent viewing videos rises between 100 percent and 300 percent, he adds.
The rapid influx of players eager for a piece of the ad targeting pie is not surprising, says Dmitry Shapiro, founder and chief innovation officer for online video site Veoh Networks.
"The opportunity is huge," he says. "It's too early to make sense of them all. This is the time innovative companies jump into the fray. Some will fail miserably.
Some will succeed moderately. Some will consolidate with others. There is no calling the horses yet. You have to wait."