Most video, social networking, gaming, virtual worlds and Web 2.0 applications base their business models on advertising revenues. Problem is, users normally focus on the information in the center of the web page and disregard the sidebars — which is where most ads are placed.
Israeli startup TicTacTi offers in-video advertising for advertisers and publishers that tackles this problem. The company offers two categories of in-video ads: product placement (see image above) and standard ad units (see image to the left). In both cases, the ads are placed using a photomontage overlay layer that is detached from the original video source.
TicTacTi’s product placement ads can also be superimposed on live video streams. The advantage of its standard ad unit solution is that it works seamlessly with the most common ad servers and ad networks tags, which means advertisers can simply take their standard banners and place them in videos. TicTacTi uses a relevance algorithm to analyze a broad range of information from the web site, the video meta-data and also uses speech recognition in order to optimally place the right ad in the right video. Their ads can run on all browsers and all player types, including Microsoft’s Silverlight.
TicTacTi was founded in 2007 by online advertising veterans Eyal Margalit, who is the company’s CEO, and CTO Nir Hagshury. The two met when they worked at Hotbar, an online company providing free browser toolbars that collect users’ behavior and displays optimized pop-up ads. TicTacTi raised a seed investment of $550,000 in January 2008 from undisclosed backers and is currently in the process of raising a Series A round. It has already inked several contracts with publishers (AOL’s ICQ TV, NarrowStep, RayV), ad networks (Ybrant Digital, Right Media, DoubleClick) and broadcasters, and is currently finalizing its first contract with a major consumer brand, which it declined to name.
TicTacTi is not alone with its in-video ad services. OverlayTV is a startup that focuses on user-generated advertising, motivating users to make videos into clickable ads by sharing affiliate relationships with online retailers. SeamBI, also of Israel, offers in-video-advertising by placing an invisible “green screen” wherever product placement opportunities can be found. This solution, however, not only requires having the video file, re-editing it and re-hosting, but is less scalable and doesn’t support advertising in video streams.
All the above companies are less than four years old, so their fortunes remain to be seen. The big players seem to think that in-video-advertising is the next big thing. For instance, YouTube CEO Chad Hurley sees in in-video product placement a potential extension of the company’s current in-video ads:
“That becomes even stronger as we experience that in the player itself, and maybe at some point it makes sense to have something identified to click within the video space — it may be a little bit too random, and the user may not understand it in a good way — but I think linking to products and services, that’s a big opportunity in terms of direct response.”
If in-video-advertisement can generate higher click-through rates (and higher revenues), it has the power to start a whole new genre of online advertisement.