It is becoming increasingly clear that the future of television is undeniably connected to the evolution of interactive video advertising. I’d like to share with you a short excerpt from the 2007 Entertainment, Media & Advertising Market Research Handbook.

“Never has the advertising industry – whose best known product remains the 30 second commercial – faced such wide ranging threats. Ad-skipping devices such as the digital video recorder continue to penetrate homes across Europe and the USA. Even sites which offer video entertainment find it increasingly difficult to catch consumers with traditional ads. Meanwhile the advertisers are becoming more demanding and ask for better proof that the billions of dollars they sink into advertising actually pay off. Here lies a significant opportunity for newcomers to the media and broadcasting industry to rethink traditional approaches and offer advertisers technology which provide alternative ways to target their consumers.”

I’d like to take an opportunity to take a look at the newcomers in this area and along the way share some interesting new video formats. Basically what these companies have on offer are various types of players which can be embedded in any type of website, using the Flash or Javascript protocol.

As this is still an emerging industry you may like to familiarize yourself with terms used for the currently available formats. Currently the most popular format is In-Stream Advertising. Typically they run before (pre-roll) or after (post-roll) a requested video online. In my opinion the most exciting evolution is the User Initiated Ad . Here you are giving viewer the power to click on, roll over objects in a video and trigger events inside or outside of the video. The level of interactivity for both formats is largely dependent on a complex mesh of Flash layers. Currently there are few providers of customizable interactive players and the standard functions are still limited or in development.

The first on my list of companies to watch is the Silicon Valley start up Ooyala.com, founded in 2007 by three Google engineers and well on their way to becoming one of the leaders in interactive and HD video serving. Ooyala already serves most of the content for the Indian Times and has contracts underway with some of the largest US movie studios. Ooyala has developed a player making it possible to serve various types of new interactive video formats including User Initiated Ads. Ooyala proprietory Backlot video management system is an impressive solution allowing for maximum control regarding syndication and tracking of video content on the web. http://www.ooyala.com

A pioneer is Plymedia.com, an Isreali/US company established in 2006. PLYmedia deployed their interactive and multi-dimensional web video platform before most of their competitors and currently offer the best developed User Initiated Ad functionalities. I was especially impressed by the non-intrusive Infoply method which uses a click in screen technique to offer more information on an object in screen. http://www.plymedia.com

Another Silicon Valley company which has been turning heads is YuMe.com. They will be serving InVideo overlay ads as part of Google’s AdSense™ for video beta advertising program. They offer a similar management system to Ooyala.com however in my opinion each company has a significantly different approach to the level of intrusion of commercial content but I think this is a matter of taste. YuME boasts a bewildering number of different formats some of which are available for mobile and IPTV platforms. http://www.YuMe.com

Update 18 april 2008

After having visited the conferences NAB in Las Vegas and Ad Tech San Francisco I feel this post should be updated to reflect a more complete overview of this market space. However I should add that some of these companies should be catagorized as adserve networks so there is more emphasis met on the adserve networking capabilities.

Adjustables.com
Originally a Dutch company which opened a branch in Silicon Valley this year. Adjustables distinguishes itself by offering advertisements (logos, banners, etc.) that float inside online videos, during the play out of the video content. Adjustables provides publishers of online video with advanced technology (patent pending) for integrating ads inside streaming video, less annoying other than just offering pre-rolls.Podtrac.com
A service that connects podcasters and podcast listeners and viewers with advertisers. They match audience demographics and interests with the appropriate advertising for those listeners and viewers and are more of a video adserver with large network capabilities.

AdoTube.com
A low brow video inventory server focusing on ad presentation. Creative functionality includes in-video lead generation campaigns, in-video credit card processing for video monetizing, and a Supervised Contexutalization® approach for contextualizing video libraries. They offer publishing networks but you will need to demo to have a better idea of their reach.

Aditall.com
AditAll is a video advertising community where users can quickly, simply and inexpensively create, produce and distribute video ads. Producers upload video and music clips to the AditAll inventory and set the price for their work. Advertisers can browse this inventory to find, customize and purchase the clip they like best for their needs. As with Adotube it’s early days yet and I can’t tell you much about the market reach.

Mediflo.com
MediaFLO USA, a division of Qualcomm Incorporated, aggregates and delivers premium, TV-quality entertainment and information services to mobile devices over its dedicated nationwide wireless network across the US. Its basically end to end. This is a distribution system which incorporates DRM and offers a product which could appeal to network broadcasters willing to distribute video content over a vast range of 3G capable devices.

Limelight.com
Limelight Networks offers an end to end video content delivery sytem which is used by thousands of entertainment, technology, enterprise, and government entities around the world. They enable any object in their digital media library to be instantly delivered and monetized with DRM. It offers its service over a dedicated fiber-optic network and essentially they target larger broadcast networks.

Videoclix.com has pioneered the clickable video space since 1998. All objects in VideoClix content are clickable, providing a next generation interactive video platform with a robust monetization solution for content providers, and an effective non-intrusive media vehicle for advertisers. The company caters to top producers and advertisers with its end-to-end hypervideo solution that includes: authoring, content delivery network, HD quality player, metrics, syndication, social media and standard IAB display ads. VideoClix helps monetize content through the VideoClix Ad Delivery Network while enabling content providers to bring their own advertisers, sponsors and brand integration deals to the table.

I am sure there are players I have left out, this was more of a reveiw of the companies I have been able to look at recently. However should you come across interesting additions to this list please do not hesitate to post your views.

Somewhat of a nice article from Springwise today about Spotrunner, a Los Angeles based company which is making it affordable for small local advertisers to broadcast their message on TV.”The entire process is online and automated: customers pick from a wide range of ready-made videos that are tailor-made to their industry. After selecting an ad, the business customizes voice-over text and on-screen information, and tells Spot Runner how much it would like to spend on air time and which markets the ad should run in. Complete campaigns, including production and airtime, start at USD 1,500 and can be up and running within weeks.”

As explained by iSoldIt’s CEO: “Our industry is really still in its infancy, and TV lets us visually explain what we do in ways that print and online ads can’t. Spot Runner’s Franchise Advertising Program gives our franchisees a way to get on TV and introduce their services to the community, which is extremely valuable, because once people understand what we do, they visit our stores.”

Google, Microsoft and Yahoo are quietly developing new search tools for digital video, foreshadowing a high-stakes technology arms race in the battle for control of consumers’ living rooms. To be quite frank I hope that European providers don’t do the Goo Goo..Ga Ga thing and put all their eggs in one basket. From a business perspective it does not make direct sense for DTV operators to sign up with the above unless they see common value in the deal.

“Google’s effort in the area of DTV search, until now is secret, arguably the most ambitious of the three. According to sources familiar with the plan, the search giant is courting broadcasters and cable networks with a new technology that would do for television what it has already done for the Internet: sort through and reveal needles of video clips from within the haystack archives of major network TV shows.”

Currently there are perhaps few but important suppliers of search and adsense/words platforms for private labelling, the good news is there are only a few more DTV providers. The point being that you contain and manage your advertising revenue and what could be more important to broadcasters and distribution companies.

I am not a DTV expert but I could see shared advertising revenue opportunities with broadcasters. Take for example the Amazon Search Recommendation feature tightly integrated within the user interface which will also bring up sponsered advertsing links, when a user clicks on a link Amazon gets revenue.

All the sponsered links are matched to the users recent search queries. The sponsored links are provided by Clickriver Ads and by other 3rd party ad networks. Clickriver Ads is an advertising program - currently in beta - that allows businesses to advertise services and products that complement the selection on Amazon.com. Clickriver is offered by A9.com, a wholly owned subsidiary of Amazon.com.

So to be blunt I think especially European broadcasters should take the emphasis off how important their advertisers are for them and take a better look at the viewer because in the near future he is in sole command of who gets the advertising buck.

“TiVo owns a coveted spot in millions of living rooms and has terabytes of aggregated viewing data on millions of consumers — when is someone going to wake up and buy? Could you imagine the targeted ads Google could deliver to the TV based on all that mined data? Or does Yahoo / Microsoft want to get that first-mover advantage and have instant ad inventory on the broadband-connected TV?”

Read the full story at Techcrunch

Xbox users are growing fast and they are growing up which in this context may be more important to advertisers.

Late 2007 the Extended Media Centre which hooks up to your Xbox 360 console will begin delivering iPTV through tradition telecom providers such as AT&T in the USA. Deutsche Telecom, Swisscom and Britsh Telecom are also said to have jumped on the Microsoft bandwagon. Valley View reporter Chris Nuttall reports in the Financial Times that “Microsoft’s announcement at the CES that by enabling a new medium for new players, this offering was of potentially more consequence than all the other announcements at the show this year.

He also states that ” While it makes perfect sense for companies from different sectors to converge on these new opportunities, it spells confusion for the consumer faced with so much more choice, differing technologies and connection methods for Ip TV and Video on Demand”.

In my opinion offering IP tv through the Xbox 360 makes perfect commercial sense. There are already more than 10 million Xbox 360 users in more than 37 countries. It will make it easier for you to enjoy games as well as your favourites TV channels from the same set up box. Over 5 million Xbox live community members will be connected allowing them to invite friends to play games, share content and talk over IP.

The Xbox 360 console enables telephone companies to use the set up box to rival those of existing cable and satellite TV companies which will sting current players in this market especially on a localized level such as Europe.

What does this mean for advertisers? Nothing much yet and it will depend what content is on offer. I do not believe this will be important for European advertisers until way into 2008 but it doesn’t hurt to keep in touch with the number of Xbox consoles being sold worldwide. In the meantime we will be keeping our eye out for competitors which I guess will be easy.