Brands are trying to figure out this whole social marketing thing, but the success stories are still few and far between. “I think everyone is grappling with how to use digital these days,” says Judy Hu, who is in charge of advertising and branding for General Electric. She oversees one of the world’s largest advertising budgets which spans TV, print, and the Web. I spoke with her last week about one early success GE is seeing with an online video campaign organized by Howcast that is generating millions of video views on YouTube as part of its larger Healthyimagination branding effort.

The key to the campaign was to get YouTube video personalities such as Smosh, iJustine, Alphacat, Rhett and Link, and Brittani Louise Taylor to take a physical challenge and make original videos about getting healthy. So far, all together these videos have been viewed more than 8.5 million times, rated more than 250,000 times, and attracted more than 110,000 comments.

The message GE is trying to get across is “better health for more people,” says Hu. Smosh won the challenge by applying kung fu to many heads of lettuce (1,019,526 views), Brittani Louise Taylor took the linkbait approach with her video HOT CHICKS PLAYING TENNIS! (508,584 views, see image above), Rhett and Link used children as dumbells (193,393 views, also below) and invented some new yoga moves (291,746 views), iJustine did a silly dance on the street (686,238 views), and Alphacat wrote a pretty decent rap with an updated Schoolhouse Rock kind of vibe (49,955 views).

The campaign was organized by Howcast, which also created about 20 custom How-To health videos such as “How To Fill Awkward Silences With Your Doctor”, which have been viewed an addition 350,000 times. Producing such advertorials (aka, “branded entertainment” ) is one of Howcasts’s main revenue streams. GE’s Healthyimagination ads also took over Howcast’s Top-100 YouTube channel, and each video contains both a pop-up rollover ad and a post-roll video ad. The ads have been watched about 4 million times, with a 28 percent completion rate.

It is the most successful campaign Howcast has ever done. GE was surprised as well. “We were astounded by how fast it took off,” says Hu. She plans on doing more campaigns like this in the future.

This is an important case study because it shows that branded advertising can work on the Web.  I think there are a few reasons why this took off.

1. The sponsored videos are authentic.  The video makers were given a topic (live healthier) and allowed to run with it any way they wanted.
2. GE was okay with giving up total control of the message to a bunch of Youtubers, who know better than anyone else how to communicate to their respective audiences.
3. The videos are clearly presented as sponsored fare.
4. GE isn’t trying to sell anything other than its overall brand image.

Below are a few of the videos. Are they more or less effective than a standard 30-second TV commercial?

Editor’s note: Guest author Ashkan Karbasfrooshan is the founder and CEO of video site WatchMojo. Below are his picks for the ten most likely M&A deals in online video. Previously, he wrote a series if posts about the state of online video (Part I, II, III, and IV).

Which online video companies will get bought in 2010?   Venture capitalists are desperately looking for exits while the usual suspects are sitting on more than $80 billion in cash: Microsoft ($20B), Apple ($40B), Google ($15B), Amazon ($3B), and Yahoo! ($3B) just to name the cash positions of a few potential acquirers.  Theoretically, it should be a match made in heaven, but the sheer number of venture-backed video startups is staggering so when the music stops, not everyone will find a dancing partner.

Once you assess what drives companies to merge or acquire one another, however, it seems like we’re about to enter a period of mergers between video competitors and see a series of acquisitions by larger companies looking to accelerate their video strategies, with a common theme being increasing both monetization and margins.

Right now, as the chart above shows (click to enlarge), there are two types of online video companies: those with sky-high ad rates but fairly limited inventory (company A) and those with huge inventory but woeful monetization (company B). Companies can extend profitability through technology, ad solutions or content.

With that in mind, let’s look at those 10 potential deals.

1. Demand Media will acquire Tremor Media

Demand Media has raised $355 million but to this day still generates the bulk of its revenue from its domain registrar unit, eNom. However, it is trying to move into the content business, with its “Content Farm” strategy getting a lot of attention.

Demand Media’s existing content lends itself better to an arbitrage strategy built around Google marketing and monetization, but over time it will want to do a better job entering both display and video advertising and it will do that by buying one of the many, many video ad networks out there. Brightroll, which is focused on brands, is one option.  Tremor is another, focusing on reach.  That strategy should fit well with Demand Media’s modus operandi.  Tremor Media’s ads reach 177.6 million uniques, or 85% of internet users.

2. Lagardere Groupe will acquire Dailymotion

At first glance, French media conglomerate Lagardere seemingly sees no value in communities as a marketing platform: “There is no clear business model because you have a huge, massive audience, but it is not a marketing community,” says to Lagardere’s Chief Financial Officer Dominique D’Hinnin.

Monsieur D’Hinnin might be right, but never underestimate France’s sense of nationalism. Dailymotion is France’s answer to YouTube and it has taken steps to reduce its share of user-generated and pirated content in favor of professional videos. (Disclosure: Dailymotion is also one of WatchMojo’s distribution partners).

With $68.5M in funding—including a tidy sum from Le Fonds Strategique d’investissement, which is an investing arm of the French State—you can imagine that one of the pillars of the French media landscape, Lagardere Groupe could eventually step in and acquire Dailymotion despite its admitted monetization problems: “At the moment, we are poor at monetising our audience,” admits Dailymotion CEO Cedric Tournay. Lagardere could help with that provided Dailymotion can continue to de-emphasize its less advertiser-friendly content.

Additionally, Lagardere will be able to leverage Dailymotion’s audience to promote its own content: the company owns Hachette along with numerous other media entities.

3. Scripps will acquire 5Min

When 5Min (another one of our distribution partners) launched, it focused on user-generated how-to content. Thankfully for them, they have since moved away from that and currently mesh

a) aggregated premium and super premium content with

b) their monetization engine, a strategy which has propelled 5Min to become a Top 10 comScore video company.

Scripps is a producer of super premium content, and like Discovery Holdings, it might prefer to distribute its programming through TV and cable. But, with consumers viewing more and more videos on the Web, it will need more content for its sites and will look for more inventory online.

The two companies already have a strategic deal in place, so they have some familiarity with each other.

4. Google will acquire Ooyala

Last year it was rumored that Google was going to acquire Brightcove for $500-700M. That was always unlikely because many of Brightcove’s financial backers are the very same media companies that view Google as the bane of their existence.  Moreover, Google makes a lot of acquisitions but rarely are they large (YouTube, DoubleClick and AdMob being the exceptions).

A more logical fit to expand its video foothold would be Ooyala, which competes with Brightcove and includes Glam Media and others as clients… and was founded by a former Google executive.

Google has the consumer video market cornered with YouTube.  Iit could leverage Ooyala to go after the corporate market by undercutting Brightcove.

5. Microsoft will acquire Brightcove

The consolidation in ad services peaked with Google’s $3.1 billion acquisition of DoubleClick and Microsoft’s $6B acquisition of aQuantive. After selling ad agency unit Razorfish, today aQuantive is Microsoft Advertising, and as advertising continues to move into video, MSFT will probably want to offer a video content management to go along with the Atlas ad serving platform.  That is where Brightcove fits in.

If you think about it, Google owns video search by way of its YouTube acquisition. Microsoft wants to push into cloud computing and at least conceptually, owning Brightcove would give it a legitimate cloud computing foothold in professional video content with no real threat to any of its core businesses. It could also better integrate Brightcove (which increasingly powers media companies’ videos) into Bing’s video search, helping it kill many birds with one (albeit expensive) stone.

6. Yahoo! will acquire Freewheel

After acquiring Blue Lithium and Right Media, Yahoo! got a shot in the arm and grew its advertising reach across the Web, outside of the Yahoo.com property.

Freewheel is founded by former DoubleClick employees but Google (which bought DoubleClick) might have less interest than one would think in augmenting its video advertising reach across the Web considering it owns YouTube which accounts for 40% of online video consumption. YouTube only monetizes a small share of the billions of videos on the site.

Freewheel, which allows marketers and publishers to manage campaigns across a variety of distribution sites, would be a nice fit with Yahoo!, which might want to extend its Audience Network in video offerings.

7. Gannett will acquire Livestream

Gannett already invested $10 million in Livestream (then known as Mogulus).

The fit is a natural: print media will want to bolster its video offerings (be it content or technology). The main challenge here is that media companies have grown wary of buying technology firms, but news organizations will have a natural predisposition for all things live and the investment sets the stage up for an all-out acquisition.

8. Nielsen will acquire TubeMogul

TubeMogulprovides analytics to countless marketers and publishers (we use them at WatchMojo). Nielsen and comScore are both looking at adding video capabilities and TubeMogul has done a good job of getting wide adoption, providing Nielsen with a quick entry into the burgeoning video space.

Also, David Toth, former president, CEO, and co-founder of the NetRatings service joined TubeMogul’s board.

9. AOL acquires Howcast

AOL’s recent acquisition of StudioNow is a sign of things to come: When AOL was spun off from Time Warner, it was shackled with restrictions on its use of cash and thus the size of the deals it could complete.

But AOL wants to create content, lots of it. AOL’s Tim Armstrong is an investor in Howcast; he was also an investor in Patch, a local startup Armstrong acquired after joining AOL (to his credit, he simply recouped his initial investment and did not participate in the capital gain).

Howcast creates videos themselves, lets users create and upload videos and aggregates other professional content (Howcast is one of our distribution partners as well). While Howcast might have proven redundant with the StudioNow acquisition, AOL has a history of doubling up when it focuses on a space (think ad services: Tacoda, Advertising.com, and Third Screen Media) and Howcast is more focussed on how-to videos.

10. News Corp. acquires Break Media from Lionsgate, spins off NewCo

News Corp.’s Rupert Murdoch is in the process of divesting from the Web: first selling Photobucket, then chucking Rotten Tomatoes to Flixster while retaining a stake in the new venture.  I see something similar happening with Acquisition #10.

Break Media is one of the so-called YouTube clones who has managed to differentiate itself by focusing on the men’s 18-34 market and creating content, be it videos and now video games.  Back in 2007, Lionsgate invested $21 million in stock for a 42% stake in Break.com. At the time, it also got a call option (basically, the right to buy) which is “exercisable at any time from June 29, 2007 until the earlier of 30 months after June 29, 2007 or a year after a change of control, to purchase all of the remaining 58% equity interests (excluding any subsequent dilutive events), including in-the-money stock options, warrants and other rights, of Break.com for $58 million in cash or common stock, at the company’s option.”

The 30 month window expired on December 29, 2009, and despite Break’s momentum, I don’t see any major incentive for Lionsgate to exercise its call option. I do, however, see the following happening (well, maybe…).

Lionsgate might be more willing to trade its 42% stake in Break Media for a smaller share in a NewCo. that houses both Break Media and News Corp.’s IGN Entertainment, another leader in the men’s 18-34 space. (again, bothh Break and IGN are distribution partners).  This NewCo. would then be a more likely candidate for an IPO and would allow both Lionsgate and News Corp. to focus on their core businesses and cash out their investment over time.

Needless to say, all of the above deals are idle, if informed, speculation on my part.  What do you think are the most likely video exits this year?

Two years ago, former Googlers Jason Liebman, Daniel Blackman and Sanjay Raman launched Howcast, a site filled with originally-produced how-to videos on everything from “How to Ice Skate” to “How To Deal With a Mean Boss.”  Today, Howcast is streaming 25 million videos a month across its network, which includes its own site, popular channels on YouTube and Hulu, and an iPhone app (iTunes link) which has been downloaded more than one million times.  A year ago, the startup was streaming about 10 million videos a month.

To put this in perspective, YouTube streams more than 12 billion videos a month and the next nine video properties on the Web all stream north of 200 million videos a month.  But Howcast’s growth is still very respectable for a niche video site.  The niche Howcast is going after, however is a very broad one.  Informational videos can be applied to practically any topic, are always in demand, and are search-engine friendly.  Its YouTube channel alone is in the top 100 channels, with close to 100 million cumulative views so far and 111,000 subscribers.

Now that Howcast’s videos are gaining traction, CEO Jason Liebman is focusing more on monetization.  ”We’re on track to be profitable by the end of the year,” he tells me, although he won’t go into specific numbers on either profits or revenues.  He just hired his first head of sales to sell ads directly.  Howcast makes money two ways.  It places clickable overlay ads on its videos from ad networks such as Google and ScanScout.  Selling ads directly should increase its CPMs.

The other way Howcast makes money is from so-called “branded entertainment.”  These are how-to videos for hire: advertorials, product demos, customer support videos, social branding.  Companies such as AT&T, Kodak, JetBlue, Twitter, and Boxee pay Howcast a fee to create these videos and then pay on top of that for each view.  Some examples of these sponsored videos include “How To Get Started With Boxee” (embedded below), “How To Use Twitter,” and “How To Use Your Cell Phone as A Wingman” (AT&T).  These aren’t ads per se, they are more instructional videos on how to use a product or attempts at social branding.

Not only does Howcast produce the videos, it also distributes them through its site, and various other channels.  Branded entertainment pays well.  Although it account for only about 10 percent of the videos Howcast produces each month, it currently makes up a majority of Howcast’s revenues (that could shift back towards more traditional ads as total views and direct ad sales ramp up).

Howcast produces all of its own videos through a network of freelance filmmakers.  It provides them with the scripts, voiceovers, and graphics to streamline production.  Using this method, Howcat is able to crank out about 1,000 how-to videos a month.  It typically pays filmmakers about $50 for a 2 or 3 minute video.  Like Demand Media, it uses all sort of data—from search trends to video views to editorial calendars—to figure out what topics to assign.  Although Demand Media does it at a much larger scale. AOL, with its recent $36.5 million purchase of StudioNow, is also ramping up its online video efforts.

Howcast still has a ways to go before it proves its model, but two years after launch, with 35 employees, it’s starting to hum.  Just looking at Howcast.com alone, comScore Videometrix estimates the site is doing 1 million video stream a month (see table below), compared to 1.7 million for HowStuffWorks and 422,000 for eHow (which is owned by Demand Media, but isn’t primarily a video site). These numbers are not comparable to the 25 million above, which come directly from Howcast.  Leibman says traffic to the site is doubling every quarter.

If you are interested in how to use the Web to create a grassroots political movement, tune in today and tomorrow to the Alliance of Youth Movements Summit, which is being sponsored and livestreamed by Howcast. Right now, James K. Glassman, Under Secretary for Public Diplomacy and Public Affairs, just finished talking about How To Build a Movement Against Terrorism and up next is Oscar Morales, an engineer deom Columbia who set up a Facebook group called One Million Voices Against the FARC that organized in mass demonstrations on the street in that country.

Tomorrow morning there is a panel with Obama’s media team that will explore how they used teh Web to win the U.S Presidential election. You can see the entire schedule here. Howcast has also made some (simplistic) videos on How to Smart Mob, How to Circumvent an Internet Proxy, and How to Create a Grassroots Movement Using Social-Networking Sites.

Howcast, the instructional video site founded by three ex-Googlers, today announced that it has formed distribution agreements with AOL, Metacafe, Bebo, and blip.tv.

Howcast provides professionally produced instructional videos that range from “How to Make Sushi” to “How To Make a Water Gun Alarm Clock“. Many films come from the site’s Directors Program, which pays qualified members a small fee to produce guides that follow a supplied Howcast template. Directors receive increased compensation through a rev-share system for especially popular videos.

Howcast says that the new distribution deals will significantly expand its audience. The site had previously established distribution agreements with Myspace, YouTube, Verizon FiOS TV, Joost, and ROO.

Howcast has a number of competitors in this space, including 5min, Videojug, and to some extent, Instructables.

The original SmartPlayer gave users the ability to manipulate instructional videos on the fly, allowing for frame-by-frame progress, slow motion, and zooming. The new version improves on these features by introducing ‘add-ons’, which are essentially pages of text and images with no limits on length. By including all of this data, the 5min videos have become self-contained guides that can be embedded on any website.

I think that the updated player has a lot of potential. Chefs will be able to include their recipes alongside detailed videos demonstrating how to prepare a dish. And musicians will be able to include sheet music or tablature alongside their lessons – a godsend for instructors.

But despite the improvements made since the first Smartplayer, 5min still has a ways to go. For one, it seems that there is no way to resize the video and attachment windows, which is a pain when there is a lot of text. There is also no way to get the ‘add-on’ field to auto-scroll, which would be key for musicians attempting to play a score along to a video.

Other competitors in this crowded space include Howcast, Expert Village, and Instructables. You can check out a sample video below (you might want to make it full screen).

Howcast is also announcing an $8 million series A financing, led by Tudor Investment Corp. In addition to their own site, they already have a Youtube channel (where they split advertising revenues with their former employer). The Howcast team also has signed distribution deals with Myspace, Verizon for its Vcast phones and FiOS TV, Joost, and ROO. JetBlue is the launch advertiser. Howcast faces competition from Expert Village, 5min, and Instructables (even though the latter uses step-by-step images more than video).

The site is launching with professionally-shot instructional videos on everything from “How to Paint a Wall” (see embed below) and “How to Groom Your Cat” to “How to Get Laid.” There is a familiar formula for each one: The Howcast graphic, an intro explaining what you’ll need for the task at a hand, and step-by-step instructions explained in a voiceover. The video player on the site lets you jump to different chapters or steps, lets you zoom in for a better look, and provides the transcript as well. Viewers can add comments in the form of tips, warnings, and facts to each video. And the Flash-based site lets you browse the video directory on the left hand side while you are watching a video without interrupting it or going to a different page.

http://www.howcast.com/flash/howcast_player.swf?file=716-How-To-Paint-a-Wall

Audience participation in the creation of the videos starts with the ability to suggest video topics such as “How to Do A Television Appearance,” “How to build a Sofa From Scratch,” “How to Make Tempura,” or “How to Fire a Nanny.” The audience can then vote the best suggestions to the top in a Digg-like fashion.

Audience members can also look at upcoming scripts and improve them or write their own in a guided wiki portion of the site that follows the Howcast script template (introduction, instructions, tips, end with a fact). The script is then approved by Howcast, a voiceover is recorded, and Howcast farms out the production to young film school students and graduates. They get $50 for each video plus a 50/50 rev-share from any advertising. Anyone can also upload their own instructional videos to the site without going through this process.

The video ads are in the form of clickable overlays that pop up to take up the bottom part of the screen. “Pre-roll, non-skipable ads are bad, in our opinion,” says CEO Liebman, who originally joined Google through the acquisition of Applied Semantics and helped roll out AdSense. Howcast is starting with a $20 CPM rate card. The more targetable those ads become, the higher the rate should go. Each video is tagged by topic and each one has a visible script, making them highly searchable. A paint company might want to buy up spots in the How to Paint video, for instance, or even buy paid links in the list of necessary supplies that is part of the video. Can you say AdSense for video? Jason Liebman can.