Video search engine blinkx has been plugging away at video search for years now. Finally, six years after being founded, and already publicly traded on the London stock exchange, it hit profitability for the first time this year. For the six month period ended September 30, revenues doubled to $27 million and it showed its first profit ever of $2 million (or $0.64 per share on a diluted basis).

Blinkx has a small but healthy business powering video search for a growing list of partners, including most recently with UK-based IPTV set-top box maker Amino Communications to power search for Internet TV. The total number of video searches per day it is powering is now 31.6 million, nearly triple the 13.1 million daily average in the same period a year ago.

Its revenue growth rate is on par with a year ago. If it keeps it up, it will hit $50 million in revenues by the end of this financial year. Blinkx has been moving aggressively into video advertising with its Ad Hoc contextual video advertising and demographic targeting product. The average size for video ad deals is up 40 percent.

If it can score more Internet TV partnerships, it might have an opportunity to take what it’s learned in online video over the past few years and apply it to real TV.

Through a browser add-on (which currently only works on Firefox or IE), Cheep recognizes when you’re looking at a specific product and will show you current price comparisons from around the Web, as well as reviews and ratings. Cheep will appear as a small bar at the top of your screen when you’re looking at a product page. The startup has indexed millions of products nearly 200 online retailers, including Amazon, BestBuy and Walmart, so chances are that Cheep will be able to find the product you are viewing within your browser.

Beyond the add-on, Cheep is also a standalone social network that encourages users to share their shopping activity, including purchases, wishlists, likes, reviews and more; with other Cheep members. The startup is also creating profiles for millions of products, which users can share on Facebook and Twitter.

I doubt I’d really use the online community side of Cheep but the browser add-on could be useful. The ability to receive automatic, contextual information such as alternative reviews or prices for a product without having open another browser tab for a search is appealing.

IVA provides users with trailers of new releases, classics and “everything in between” from major film studios including Warner Bros, Paramount and MGM, along with video game publishers such as Nintendo, Capcom and Namco.

Describing it as as a “treasure trove of video for film buffs, music lovers and gamers”, Suranga Chandratillake, founder and CEO, blinkx, says that the partership with IVA strengthens the video search engine’s entertainment index. Blinkx already works with 720 partners and has indexed over 35 million hours of video and audio content to date.

Behavioral targeting is all the rage with online display advertising right now, and video search engine blinkx is bringing it to video. For the past few years, blinkx has offered contextual video advertising through its Ad Hoc program, which matches ad keywords against a speech-to-text translation of the video, as well as all the tags and titles associated with that video. “We are extending targeting in Ad Hoc from contextual to behavioral,” says CEO Suranga Chandratillake.

He explains the new targeted advertising product in the video below (I caught up with him last week as he was passing through New York City). Overall, blinkx powers 17.5 million video searches a day across its network, which reaches more than 60 million people a month. But for now, the behavioral targeting will work only on blinkx.com, which is a small part of its overall reach. Using cookies, blinkx will assign psychographic profiles to people base don what they watch. It will start with nine profiles, including Yoga Moms, Digital Dads, Gossip Girls, Adventurers, and Infonauts.

Brands will be able to target specific segments by showing their ads only to Yoga Moms or Digital Dads. People are classified in the different buckets depending on what they watch. Binkx trains the system by extracting different concepts from each video and matching them to a profile. For instance, videos about children, crafts, soccer, or terrible twos are the types of things Yoga Moms supposedly watch. Advertisers can see the keywords associated with each psychographic profile to determine who they want to go after.

By blending contextual and behavioral targeting, Chandratillake thinks he can get the best of both worlds. But true behavioral targeting would probably require data inputs from beyond blinkx.com, and even beyond any group’s video viewing habits. True behavioral targeting would take into account what websites you visited recently, and not just what videos you’ve watched. But blinkx is starting with what it can control. Down the line, it might have to incorporate data from broader behavioral targeting ad networks.

While at AIM-listed blinkx, which claims to be the largest video search engine, Morgan helped forge partnerships with the BBC, MSN, Ask.com, Miniweb, Rambler and Radian6, among others, and so certainly from the outside he looks to be a good catch.

And potentially, a significant loss for blinkx, a company that, let’s just say, we haven’t heard much from of late.

A lot of hopes are being pinned on video search these days as the only remaining source of strong advertising growth. One of the few publicly traded pure-play Web video companies is blinkx, which trades on the London stock exchange, and just announced its half-year earnings for the fiscal year ended September 30, 2008. The company’s revenues rose 115 percent to $6.4 million for the six month period (although the comparison is only partial—see income statement below). It’s gross profit doubled from $2.2 million to $4.5 million.

Although blinkx runs its own video search engine, which is showing a nice ramp in visitors, most of the video searches that blinkx powers are on about 20 partner sites such as Ask.com, Lycos, some Microsoft sites, and Viacom’s AddictingClips. Blinkx indexes more than 32 million hours worth of video from 420 content partners, including most recently People.com, CBS, and Getty Images. Its syndicated video search reached 64 million people and accounted for 668 million pageviews in September, according to comScore. Blinkx is serving up 7 million video searches a day across its network. Here are some stats for the past six months from the company:

• Total searches – 1.2 billion

• Total monetizable Searches – 831 million or 71%

• Blended average CPM is $16.25 (CPMs range from $8 to $48)

In addition to powering video search, blinkx also has its own AdHoc video ad network that can place contextual ads in videos triggered by the words spoken in them. The company is ramping up that effort by hiring ad sales people, which is one of the main reasons it is still losing money. It spent $6 million in sales and marketing during the six-month period, nearly as much as it generated in revenues.

As a result, Blinkx still showed a net loss of $4.3 million. At least that is better than the $13.7 million loss for the same period in 2007 (not including IPO costs of $11.5 million). But it is still a loss. The company has $32.4 million in cash, $11 million less than it did a year ago.

A couple weeks ago, blinkx CEO Suranga Chandratillake was on a Beet.TV panel I co-moderated. He speaks towards the end of the video below starting at the 2:45 mark about the speech-to-text technology blinkx uses to index and search the actual spoken content of videos, and how that helps avoid a situation where video creators are gaming the search engines by putting deceptive tags, titles, and descriptions on their videos so they rank higher in search results.

Stop me if you’ve heard this one before. Blinkx, the video search engine, is getting into video distribution. Today it will launch BBTV, a downloadable player that streams video from content partners using peer-to-peer technology.

The initial content lineup is rather spare: forty-odd independent movies from Dogwoof Productions and other videos from existing partners such as Young Holywood (celebrity videos), Kiplinger (financial videos), Shiny Media (fashion videos), ExpertVillage (how-to videos), TurnHere (travel videos), and Mavericks (surfing videos).

There are plenty of other P2P video players out there, including Joost, Veoh TV, Vuze, and Babelgum. None have exactly taken the world by storm when compared to video available through the browser. But you can do more inside these custom players, as you can with BBTV, and the viewing experience is much better.

Blinkx CEO Suranga Chandratillake gave me a demo last week. He positions BBTV as completely different than Joost:

What Joost tried to do from Day One is present itself as a true alternative to regular television. Can you actually do that? It is hard because TV is actually pretty good. If this will be of interest to the average person it has to offer something new and different.

Where he tries to be different is with the technology and the experience. With BBTV, you can stream full-length movies to your PC in decent quality. Using Blinkx’s speech-to-text technology, you can see a full transcript of any video and go to that exact part of the video by clicking on any word. “Speech becomes navigation,” says Suranga. You can also jump off to the regular Web by hitting different key strokes to, say, search for a person’s name on Wikipedia or look up something on IMDB.

But why not offer the service through a regular Web browser? He is actually agnostic:

If you can do it on the browser, you sacrifice certain levels of control and quality, but you get a platform that everybody uses. I don’t think we are wedded only to this experience. To make it fit seamlessly you need to package it. I would not be surprised if we implement this eventually in a browser.

That would make BBTV much better. Barring that, a Mac version would be nice.

Over the past couple days, conversations I’ve had with two different video-startup CEOs—Suranga Chandratillake of blinkx and Nick Grouf of Spot Runner—has got me thinking about what needs to be done to make TV advertising as relevant as video advertising. We have a long way to go, but it boils down to two things: 1) replacing 30-second commercials on TV with relevant ad overlays that pop up at exactly the right moment during a show, and 2) automating the buying, creation and placement of TV ads to make it more like buying search ads.

Yesterday, blinkx CEO Suranga Chandratillake dropped by my office and we got to talking about video ads. Blinkx is a video search engine, but it is also building a video ad network called AdHoc that attempts to place contextually-relevant, clickable text ads in a bar above the Web video being watched. For example, in the screen shot of the soccer video above, you will see a text ad for shoes. YouTube is doing something similar with its new AdSense for Video ads. The ads themselves don’t have to be text. They can be banners or logos that pop up, or even new videos-within-a-video under the control of the viewer. The point is that they exist within the main video itself, not after or before it. And they appear briefly at relevant points during a show.

Determining whether an ad is relevant for a video is done with some of the same techniques used on Web pages. Both YouTube and blinkx look at the tags and text surrounding a video, but blinkx actually goes beyond what YouTube does. It uses powerful speech-to-text translation technology to create a transcript on the fly and then matches relevant ads to the words. The ads appear as those words are being spoken. Suranga showed me the transcript-creating capabilities of blinkx, which are not visible to users on his regular site, and it was impressive. He clicked on a word in the transcript and that point in the video started to play. Once you can do that, inserting relevant ads is trivial. He says blinkx can also match ads to related concepts extracted from the transcripts.

What would it take to run ads like this on regular TV? Even if the ads are not clickable, simple banners or graphical buttons that appear in sync with what you are watching would grab your attention. Imagine a Nike logo popping up when you are watching basketball, or cruise ship when someone in a movie mentions the Bahamas. It could be annoying, but not if used judiciously. And it would certainly solve the problem of people fast-forwarding through ads with DVRs.

The big issue would be separating the ads from the underlying video so that new ads could be placed when the show goes to cable or is shown in reruns. Right now, all of those graphics you see on TV are pretty much baked into the video. Suranga said it would basically require new TVs with powerful chips and Internet connections. The computer chips alone would add about 50 percent to the price of most TVs, so it will still be a while before that happens. The other option, of course, is set-top boxes. But the cable companies don’t have any incentive to allow ads they don’t control to be seen on their set-top boxes (which is why they are trying to figure this out themselves).

On the other side of the equation is placing the ads. What is needed is something like Spot Runner’s system, which lets businesses create ads and plan media buys across cable and network TV. These ads are targetable by demographics down to the neighborhood level. Google also has its own experiments with regular TV ads through a trial on the Dish Network, where it has software on Dish set-top boxes. But Google could be doing a lot more. Says Grouf

Google is not selling targeted ads now on TV. It is selling national ads through the smallest company in the satellite space. We expect them to become more aggressive, but have not seen it yet.

These two conversations keep ringing through my head. I can see a day not too far where ads on TV start to look like the text and graphical overlays we are beginning to see with YouTube, AdHoc, VideoEgg and others. But you also need an automated placement and creation system like Spot Runner’s, which today only deals with regular 30-second TV spots. Combine the two together, and there’s the future of TV.

They’re launching an ad network, “Blinkx AdHoc”, that lets publishers serve contextual ads on top of the videos they embed on their sites. All a publisher needs to do is sign up and wrap their video’s player in Blinkx’ ad code you can get here (there’s a full explanation in a video I embedded below). Publishers are paid half of any ad revenue generated from ads served on their site via PayPal. I have a feeling that this product will be popular amongst video submitters for sites like Digg.

Behind the scenes, the technology matching ads to the videos comes from Blinkx existing “AdHoc” ad server, which powers the contextual ads served on their own and partner sites (Ask, Real, Lycos, Infospace, Looksmart). AdHoc looks at meta data and parses any speech in the video to match the clip with an appropriate ad. Suranga Chandratillake, co-founder and CTO of Blinkx, says their network has improved ad yields anywhere from 10-150% depending on the content of the video. Short entertainment clips don’t tend to see as much improvement, but longer informational clips see higher gains by picking out advertisements related to the concepts being discussed.

Blinkx has done their best to not obstruct the operation and ads of the original player. Ads show up as drop down text links at the top of video or as a static box displayed above the player. It’s very similar to AdBrite’s BritePic product.

Before there are screams of indignation over putting ads on someone else’s videos, this doesn’t seem all to different to how video publishers currently make money. They place Google Adsense alongside embeded videos. Other startups have gotten in trouble by materially altering the function of a site’s video player (i.e. Searchles pulling videos out of Grouper’s player). Blinkx doesn’t alter the underlying player, but layers on top of it. Yet it seems a curious reality that in online video, apart from all other media, it has become perfectly acceptable to embed and monetize someone else’s content. On the other hand, creators can choose to not allow embeds of their videos.

The bigger problem is whether Blinkx’ network can compete against YouTube’s pre-bundled advertising. While Blinkx offers the ability to serve advertising over many of the social video sites, YouTube still dominates the content in that arena. It won’t be long before their video AdSense expands beyond a select few opt-in clients. Blinkx is going to have to offer publishers a bigger payoff without angering social video sites in order to survive.

There are a couple key issues they’re all struggling with as they try and generate the greatest amount of ad revenue. There’s still some uncertainty about where to put the ads (pre/post/interstitial?). Even the type or length of the ad is up for debate. A recent study found longer ads were more effective at branding, while conventional wisdom has cast doubt on users sitting through the longer plugs.

After deciding on the format, determining the content of the video in order to generate relevant ads is yet another tough problem. It’s also a dire matter for big brands that don’t want to risk being associated with inflammatory content. Finally, these ad platforms will need publishers, advertisers and a marketplace to trade in.

Here’s a look at what people are doing in video advertising:

Definitely the team to watch, YouTube is treading carefully, experimenting with text ads running along the bottom of the video that users can click on for a full video ad. They’re going to be testing the system with some of their top content producers and word on the street is that the terms are pretty good. Revver splits ad revenue 50/50 with publishers. They run ads at the end of viral videos, which might mean that people are still paying close attention after watching the main content. However, this also means they lose some precious real estate to help drive traffic to other videos on their network like YouTube does. Revver filters the content themselves, tying in the appropriate ads. Similar to Revver, VideoEgg helps publishers deliver and monetize their video inventory. It’s a very hands on approach suitable for larger brands that have tight control over the quality and context of their content. They serve up over 20 million videos daily across their EggNetwork. Ads show up alongside lead ins to other videos as well. ScanScout’s technology scans each video and determines content, with ads delivered contextually to match each scene. They run text ads along the bottom of the videos based on context derived from audio analysis and user behavior.

They’re like adsense for video, tying contextual text ads based on the content of a video. It looks similar to what YouTube is aiming for. When videos play, Adap.tv digs up relevant Amazon products and Looksmart ads to populate an ad bar on the bottom of the video at key moments. They use tags and other meta data, as well as speech to text translations to find out what the video is about.

AdBrite was one of the first to overlay ads on videos with their InVideo platform. Adbrite has created an embeddable video player similar to YouTube. If we choose to show a video on TechCrunch, we can use this embeddable player, and at our option it will include Adbrite ads and our logo as a watermark. Anyone who takes the content and embeds it on their own site will show the same video, with the same ads and watermark. And all click backs on the video go to the original site.

The most interesting ad play, BroadRamp wants to make everything you see on your video a possible point of sale. See a t-shirt you like? Just click the video to buy it now. Tagging or programmatically generating the links to products from the video may not scale or prove too difficult. Their core business is still video content delivery systems, however.

Formerly Podzinger, Everzing searches audio and video. Since they don’t own the content they can’t insert ads on the video content, but their speech-to-text transcription means they can help solve the problem of finding out the subject of a video.

A video search engine like Everyzing, Blinkx analyzes videos speech and meta data to tease out the content of the video. They also claim to use visual recognition as well. However, Blinkx has also leveraged their technology to launch adHoc, contextual advertising based on the content of the video.

Another video search engine currently running in private beta, Cast.TV looks at a video’s meta data and surrounding links to determine more context around the video. We’ve been impressed with how well it works. They haven’t discussed plans to incorporate advertising, however.

Coming up with a kick ass, scalable ad platform solution for social video that satisfies the needs of publishers, advertisers, and viewers is only a piece of the problem. While finding the most effective format will take a lot of testing until consumers reveal the most effective methods, the platforms will also need video content to monetize. Since well defined video properties with targeted content can work with sponsors on established video ad networks, the ideal market for these platforms remains effectively monetizing the jumble of amateur viral video floating around on social networks and YouTube. However, YouTube, which currently owns the lion’s share of video on the net, seems to be taking their time developing the solution in house.

That leaves becoming a destination, partnerships, or acquisition as possible outs. Video search sites like Blinkx and Everyzing are currently monetizing their search pages, but can’t take full advantage of their platforms by embedding ads into the content they link to. While these sites offer deeper video search, existing as a destination site is also a tough path that goes up against established web properties like Google, Yahoo, and AOL. In a slightly different way of going it alone, AdBrite has been going directly to publishers with their InVideo player. Adap.tv has been testing out partnerships, trying their platform out on MetaCafe.

As with most ad platforms, advertisers and publishers will be trying them out for effectiveness. In the end, the startups that can deliver the most return to these two will win out.

Everyone’s got a “widget strategy.” There are widget marketplaces (see WidgetBox, LabPixies and Wigipedia), widget blogs (see WidgetsLab and Widgetoko). There was a whole conference on widgets earlier this month.

Perhaps this post is just us trying to get it out of our system once and for all – but in all likelihood widgets are here to stay. They provide a lot of functionality to website publishers. Widgets are in their infancy, though, and we’re all still learning how to best use them. After this I promise to never embed 3 widgets in one blog post again.

Blinkx Wall

Audio and video search engine Blinkx now lets website publishers place a wall of search result previews on any site using a widget. The Wall below displays search results for the phrase Net Neutrality. Give it a chance to load, it’s way too slow, hopefully that can be improved. The display is fed by RSS – so its contents will change as new search results become available. It could be over the top, but the size and number of nodes in the wall can be changed – this is the “tiny” version. I’ve used Blinkx feeds in the past to create, for example, a page listing the most recent audio and video news about Zimbabwe. This Blinkx Wall is a much more interesting way to display search results. The down side of this is that search results often include video that’s been removed for copyright reasons – video producers certainly wouldn’t want search driving viewers to their work (albeit on other sites). We found out about this widget at Beet.TV, one of the best places to learn about video online.

“Net Neutrality” in the News

http://www.blinkx.com/w?g_StageWidth=280&g_StageHeight=240&&g_ApiServer=www.blinkx.com&g_sImgServer=http://us-store.blinkx.com&g_sApiQuery=%2Fapi%2Fstart.jsp%3Faction%3Dquery%26databasematch%3Dmedia%26totalresults%3Dtrue%26text%3DNet%2BNeutrality%26start%3D1%26maxresults%3D100%26sortby%3Drelevance%26fieldtext%3DBIAS%7B1163632159%2C1000000%2C20%7D%3Aautn_date%2520AND%2520BIAS%7B1163632159%2C10000000%2C20%7D%3Aautn_date&TimeStamp=1163632159&g_ApiTunnelPath=/f/

Two more widgets, from Google and 30 Boxes, after the fold.

30 Boxed

The always innovative online calendar company 30 Boxes has released a very sharp looking calendar mashup tool that anyone can use to display RSS feeds and iCal data in an embedded calendar. Called 30 Boxed, it displays items organized by date on a calendar. You don’t have to have a 30 Boxes account to use the tool, but this will probably be great promotion for the company’s services.

You can combine multiple RSS feeds, including those for images on sites like Flickr. This could be used to push calendar updates or chronicle events and phenomena. For simplicity’s sake, the example below is displaying a single feed – photos tagged “Facebook” in Flickr.

http://30boxes.com/external/widget?url=http%3A%2F%2Fflickr.com%2Fservices%2Ffeeds%2Fphotos_public.gne%3Ftags%3DFacebook%26format%3Drss_200&forceTheme=/theme/tiny&forceRows=5

Searchable Google Map

The Google Maps API team released a new widget this afternoon – a very simple, searchable, embedded map and wizard. In the example below, we started at the location of tomorrow night’s TechCrunch 8 party in NYC. The widget wizard for this one automatically creates a Google Map API Key for your website, but you may want to check the Terms of Service before using this one extensively.

Try some searches in the search box. This took about 2 minutes to add to this post with the help of the Wizard. For a different take on map widgets, see also Platial’s new MapKit.

What’s Close to the TechCrunch Party?
http://techcrunch.com/wp-content/TC8Map.html

Blinkx stands out because it indexes not just text metadata but also the spoken word in video footage via speech recognition. The company reported this summer that it’s now indexed more than 4 million hours of audio and video content. Thus the new Lycos video search page also includes the option to search audio content as well. It’s a lot like Podzinger but for international video, with an emphasis on educational content. Blinkx CTO Suranga Chandratillake told me today that if it’s Brittany Spears you want then it’s Brittany Spears you’ll get at Blinkx – but if it’s a particular phrase being used by Condaleeza Rice on TV, then Blinkx’s technology is really what you are looking for. Just search once and subscribe to the results feed, because you don’t want to go back more than once to the site until it undergoes the redesign Chandratillake tells me is coming. (The UI is injurious.)

Google Video isn’t actually a Google (search the web) for video, Chandratillake says, and so Blinkx seeks to be. I like Blinkx’s search results, I’ve subscribed to several feeds from them for some time and I go to them every time I want to do news video search. I hope that the emerging importance of video search will propel them, or someone with similar technology, past the world of trashy content and marginal partnerships. Perhaps this deal with Lycos will be a good fresh beginning in a new era when video search is believed to be important.