“The rules of media have completely been broken,” according to Say Media CEO Matt Sanchez. Because we’re no longer living in a world where print media is sold on a newstand and video media is only presented through cable television, everything is changing. And as old companies have to adopt to that change, there are opportunities for new empires to sprout up. And that’s exactly what Say Media is going for — and that’s why VideoEgg bought Six Apart last week, forming this new company.

I sat down with Sanchez the day after the deal was disclosed (we first broke the news of the deal the day before it happened) to get his take on why such a deal makes sense and what it means going forward.

Launched in 2001, Six Apart has been a vital player in the democratization of news and the rise of blogging. Over the years, it had built up a passionate user base, and some of those people are still unclear why what was essentially an advertising network would want to buy the company. Again, the answer is to expand into more than just advertising — to get fully into content as well. Six Apart’s MoveableType and TypePad products are a part of the plan and they will remain intact. It’s about creating a new modern media company, as Sanchez puts it.

Watch above for Sanchez’s thoughts about all of this.

Advertising network VideoEgg will acquire blogging and advertising network Six Apart, and the combined entity will be renamed Say Media. The companies will officially announce the transaction tomorrow. VideoEgg CEO Matt Sanchez will run the combined entity as CEO. Six Apart CEO Chris Alden will step down.

The SAY Media site will launch tomorrow, but we’ve included a screenshot of the home page.

Update: the SAY Media site is now live, and the news formally announced.

The combined company will reach 345 million global unique visitors, says the company. These are direct visitors to hosted sites as well as third party sites running ads from the companies. The combined company will have over 300 employees, and “the vast majority of Six Apart employees will move over,” says Sanchez.

There have been rumors that some of Six Apart’s flagship products will be shut down. The company is shuttering Vox this month, for example. But Alden says that Say Media will continue to support and grow the Typepad and Moveable Type platforms.

Update 2: introduction video:

Last year was the first time the online advertising industry saw a slump in revenues (JP Morgan is estimating a 5.2 percent decline, although things looked like they started to stabilize in the third quarter). But for online advertising network VideoEgg, 2009 was a great year. According to CEO Matt Sanchez, the company “more than doubled” revenues to $25 million last year and reached profitability seven months ago.

VideoEgg delivers more than one billion ad impressions per month, which reach an estimated 100 million consumers in four different countries. While that is not terribly big as far as ad networks go, it does show that VideoEgg’s “engagement ads” are showing some decent traction. VideoEgg has a pay-per-engagement model and offers unique ad units —including roll-overs, ad frames, video ads, and iPhone ads—which go beyond bland banner ads. For instance, VideoEgg’s ads invite consumers to roll over and click on them to open them up so that they take over the whole screen, and then they can be presented with a video, a mini-website, or even a shopping experience. VideoEgg only gets paid when consumers engage with the ads.

Sanchez says the engagement rate varies, but overall VideoEgg is still seeing more than 1 percent engagement, which compares to anywhere from 0.1 to 0.3 percent clickthroughs on run-of-the-mill banner ads. So although his ads are not yet seen by as many people as those of larger ad networks, he argues they are many times more effective. “There is tremendous liquidity in impressions,” he points out. At this point, “the idea of unique reach is a non-argument. Anyone can get access” to eyeballs. If this is the year the online ad industry begins to kill the CPM (cost-per-impression) model, VideoEgg is already on the right track.

Frames are definitely back. More and more Web apps like the Diggbar are using frames to overlay a thin toolbar on top of other Websites, and the practice is causing some controversy because frames are generally frowned upon as messy Web design. Today, VideoEgg is introducing a new ad unit called the Twig, which looks like a toolbar either at the top or bottom of a Web page. The Twig ad bar frames the site and is always visible no matter how far a reader scrolls down the page. When you click on the bar, you get a three-second warning before a VideoEgg ad takes over the whole page as an overlay. You can see a preview of how it works here.

Twig is designed for blogs an other sites with comments and other elements that create long pages and cause readers to scroll down past the regular ad units normally on the side. The ads that appear after you click can be any of a variety of video or other interactive ads that VideoEgg specializes in. The Twig ad bar itself is similar to an increasingly common ad unit in videos: an overlay bar along the bottom that you click on to see the full ad.

I like the fact that VideoEgg is taking something that seems to be working in video ads and bringing it over to regular Websites. And the Twig ad bar is certainly preferable to those annoying ad units you see on some major news sites that pop up in the middle of the page and move down as you scroll, blocking what you are trying to read. (Note to advertisers: those floating ads do nothing but make me associate my feelings of anger with your brand). The thin bar at the top or bottom is unobtrusive enough and opt-in. And since it will be the sites themselves rather than a third party app imposing the frame, it probably won’t raise as many objections as something like the Diggbar. After all, as a pervasive ad unit it is not so bad.

The issue is not so much Twig on its own, it is the recent proliferation of frames across the Web. What happens when two or more frames collide? You get a bunch of toolbars stacked on top of one another, diminishing the available real estate on any given page. What starts out as a clean, unobtrusive toolbar can quickly become clutter. For instance, if you use the Diggbar on that Twig preview page, it looks like this:

Mobile game ad network Greystripe has hit 140 million ad-supported game downloads thanks to iPhone users. In the fourth quarter of 2008 alone, it supported 30 million downloads. All of these ad-supported and Greystripe says that over 50 percent of ad impressions are from iPhone games. The ads themselves have game-like characteristics designed to increase the chances of consumers clicking on them and playing with them, hence “advergames.”

Last summer, TechCrunch reported that Greystripe turned its attention to the iPhone, and is subsequently seeing an increase in downloads and ad impressions. In fact, Greystripe’s Top 10 Total Games (by ad impression) are all iPhone games. In December, the company created its own version of Adobe Flash for the iPhone, which Apple currently prohibits on the iPhone, that would allow advertisers to use rich media flash ads. The company is making the iPhone market a “priority for the foreseeable future,” finding that the device is a much more successful ad platform for gaming than Java devices.

Greystripe is not the first ad network to see potential in the iPhone-other mobile ad networks have followed suite. TechCrunch reported last November that ad network Videoegg extended its ads to the iPhone. Other iPhone ad networks include : AdMob, Medialets, and PinchMedia.

Some of Greystripes top games on the iPhone include 21 Pro, Blackjack, Cookie Bonus Solitaire, Origami Rose, and Powerboat Racing. None of these are top game apps in the iTunes Store, however.

Greystripe also distributes ad-supported free games and applications through its consumer site GameJump, as well as through the iPhone App Store in iTunes. The company inserts ads into more than 900 game titles from 100 publishers that can be downloaded onto mobile phones. Advertisers on Greystripe’s iPhone and Java games including New Line Cinema, Burger King, Jeep, Speedy Oil Change, Dunlop, Xbox, Leap Frog and Axe.

Those free iPhone apps will soon be filled with ads. VideoEgg is the latest ad network to extend its ads to the iPhone. The company is known for its video and social-app ads that entice people to click on them to open up a Flash window filled with videos, maps, or apps that let consumers learn more about a brand. VideoEgg only charges if a consumer engages with the ad.

It is taking the same approach with the iPhone, offering ads that can appear as a small banner at the top of the screen for any given app. When you click on the ad, a video could play or something that looks like a mini Webpage could pop up with more information about the brand. Why switch to mobile now? VideoEgg’s chief marketing officer Troy Young tells me:

The reason we are interested in it now is because it is becoming a media consumption platform. The things people are doing on the iPhone are more like media consumption so we think that we can get people to spend time with brands.

VideoEgg’s ads on the Web are seen more than one billion times a month by 80 million people, says Young. He says the “engagement rate” (how often someone interacts with an ad) on the Web is a little more than one percent. But so far in beta testing, the engagement rates on the same ads on the iPhone have been between 2 to 3 percent. These rates will no doubt come down as iPhone ad impressions scale up and they no longer seem like such a novelty, but even if they remain at par with the Web that would be a victory.

Mobile ads tend to perform extremely poorly, except for on the iPhone. Mobile ad network AdMob has seen similar success on the iPhone.

When I bring up AdMob, Young says derisively that the iPhone “saved them” and characterizes their ads as mostly direct response, not the high-falutin “brand engagement” ads that VideoEgg serves up. Direct response ads, like search ads, tend to do better, but never mind. Young seems to think that “direct response ads are going to have a hard time.” I don’t really see the difference. AdMob could serve up brand ads just as easily as direct response ads. And their ads work pretty much the same way. You click on them and they open up to a bigger window. It’s really not that big a deal.

The real difference between AdMob and VideoEgg is that VideoEgg won’t sell iPhone ads by themselves. For any given campaign, it will place 5 to 10 percent of the ads on the iPhone for advertisers who want to go mobile. VideoEgg will charge the same for mobile ads as it does for Web ads, at least until the numbers prove what they are really worth.

As YouTube struggles to make money on advertising, according to a story today in the Wall Street Journal, and reportedly may resort to pre-roll ads (which consumers hate, but advertisers love), maybe they should take a look at some of the innovative ad units coming out of VideoEgg. Today, VideoEgg is launching five new kinds of Web video ads. They are called:

* LIVE: Use real-time RSS feeds to continually update the ad experience
* LOCAL: Deliver zip code-specific messaging
* RICH: Easily deploy and track a rich multi-video ad experience to increase user interactivity
* SHOP: Bring the browser to the user, merchandising multiple items in a single real-time ad experience
* SHARE: Viral capabilities help spread the message through virtually any communication or social channel

The LIVE lets advertisers update the text or images via RSS feeds. In the image from the NBA ad above, the ticker at the bottom and the player’s faces change depending on what games are coming up. The LOCAL ads let advertisers ad a map button, so a Subaru ad could bring up a map of local Subauru dealers. The RICH ads offer different tabbed widgets at the bottom of the ads for different versions of the ad or to more information. The SHOP ads provide deep links to the advertiser’s online store where people can buy the DVD or cell phone being advertised. And the SHARE ads can be grabbed and spread virally on people’s blogs, MySpace and Facebook pages. You can see examples of all these ads here

All of these ad units are designed to increase viewer engagement, and in fact VideoEgg only charges advertisers if viewers engage with the ads in some way. Otherwise they are free. They call it a cost-per-engagement (CPE) model, as opposed to cost-per-thousand views (CPC) or cost-per-click (CPC).

YouTube could learn from these efforts. It is having such a hard time selling ads that it will fall short of expectations, according to the WSJ. Falling short, for YouTube, means revenues of about $200 million this year. The days of building market dominance at the expense of revenues appears to be over, with Google sales chief Tim Armstrong spearheading an effort dubbed “Project Spaghetti” to fix the “105 problems with YouTube’s ad sales,” reports the WSJ.

It looks like Citi analyst Mark Mahaney’s $500 million estimate for YouTube revenues in 2009 is going to be hard to reach. One way to quickly get there, though, would be to put pre-roll and post-roll video ads on the estimated 4 percent of videos that are advertiser-friendly (i.e. are not inappropriate or copyright-infringing—YouTube can’t plaster regular display ads on most of its pages for the same reason).

With more than one billion clips viewed per day, that 4 percent is big enough to generate some serious cash. But pre-rolls and post-rolls (10-second to 30-second video ads before and after each clip) kill the Web video watching experience. They interrupt the flow of watching videos online, which is controlled by the user. The types of video ad units that VideoEgg is experimenting with are more along the lines of what YouTube should be doing. Just as advertisers only pay if someone clicks on one of its search ads, they should only have to pay if someone chooses to engage with a video ad.

The types of ads VideoEgg is releasing may or may not be the right answer, but they are a step in the right direction. YouTube could make those types of ad units the industry standard by its sheer dominance. But if it caves and starts putting up pre-rolls and post-rolls, then these new forms of advertising might die on the vine.

EMI is a particularly litigious company. In the recent past, they’vd sued or threatened to sue AllofMP3, YouTube, Apple, MP3Tunes, XM Radio, Infospace (can’t really blame them there) and even The Beatles.

One person close to the litigation says that the parties have been negotiating with EMI for well over a year to avoid litigation, but that they were unable to reach agreement. The shakedown attempt before litigation is standard practice these days. But what is a little different here is that EMI is going deep into the supply chain to find other deep pockets.

VideoEgg, for example, provided video functionality to Hi5 in the past, but the deal ended in April 2008, and they no longer work together. The ten John Doe defendants are presumably other service providers, and/or executives of Hi5, VideoEgg and those other companies. The fact that EMI included VideoEgg in the lawsuit shows that they care little about current infringement – they just want a payoff for stuff that happened in the past.

VideoEgg CEO Matt Sanchez says that they comply with all DMCA takedown demands, but never received one from EMI. VideoEgg also used AudibleMagic , he says, to identify and proactively removed copyrighted material.

The lawsuit complaint, which was filed in New York, is below.

http://www.docstoc.com/docs/wrapper.ashx?doc_id=859300&swf_url=http%3A//content1.docstoc.com.s3.amazonaws.com/Capital+v.+VideoEgg.pdf.swf&showrelated=0&showotherdocs=0&showstats=0&enableFullScreen=1
EMI Music v. VideoEgg, Hi5 and others – Get more Legal Forms

Today at an event in New York they’ll announce a business model change, moving away from charging advertisers a cost per thousand impressions (CPM) for their display ads to a new model where advertisers pay only when a users has engaged with the ad. The new product is called AdFrame Brand Response Network – quite a mouthful.

Engagement is defined as clicking on the ad, or hovering over it for a second or two. Once that happens, a new Flash overlay pops up over the content on the page and shows a video, Flash game and other content. Once the Flash overlay is triggered, the advertiser pays a fee of $.50 – $1.

VideoEgg CMO Troy Young says its a much better deal for advertisers, since they pay only when they have a verifiable action by a customer. And publishers, while they don’t get a guaranteed fee per impression, may make more money anyway. VideoEgg says they were able to charge $10 or so CPMs for their ads previously. The new ads, which have engagement rates of .5% – 9%, generate comparable CPMs of $2.5 to way above $10. Plus, Young says, advertisers are much more comfortable buying more inventory under this new model, so there is much less unsold advertising. That last sentence is key to publishers, who care about revenue per page view on average, not just small ad buys at high CPMs.

Microsoft has signed up for the new product as an advertiser, and will use it to distribute videos promoting Microsoft Office (an example ad unit is here). There are also a number of examples on the product home page.

VideoEgg is serious about this business – they’ve got 25 full time sales people out there selling ads for publishers in the network. The company has raised a total of nearly $34 million over four rounds of financing.

The NY Post, not always the most reliable source but pretty good when it comes to Madison Avenue, reports that possible acquisition targets include Spot Runner (cheap TV ads for local businesses), VideoEgg (video ads and a Facebook play), or JumpTap (mobile ads). WPP is already a minority investor in both Spot Runner and VideoEgg. Quick, sell those ad startups before the recession hits.

Generally speaking, advertisers face a number of challenges in respect to in-video advertising: Pre/Post rolls typically cost in the $10-$30 per CPM range. On top of that, producing the ads themselves is a costly endeavor. Then there’s the matter of being able to convey only a single message. Lastly, the inability to safeguard against ad placement in questionable content is a major deterrent for many advertisers.

adap.tv’s new offering tackles most of these issues head-on, with the most interesting aspect being support of keyword and product datafeeds—routinely used to structure search engine marketing campaigns. This is significant because it means that advertisers can reuse existing datafeeds by importing them right into adap.tv for instant targeted video advertising campaigns. Advertisers using AdWords or Overture can easily export their campaign structures to CSV format, upload them into adap.tv, and presto: instant video ads.

On top of datafeed support, adap.tv is also introducing:

• Content Rating: Advertisers can employ content rating levels—G, PG, PG-13 & NC-17—in three dimensions: violent, sexual and illegal content. Rating levels are automatically determined for each video through adap.tv’s content analysis technology.
• Ad Templates: Brand oriented look & feel can be leveraged through ad templates which can range from flat, to animated, to interactive (see video below).

Amir Ashkenazi, CEO, claims that publisher and viewer growth is doubling month-over-month and that the company serves ads and pays publishers on almost every video view. Advertisers now include the likes of Amazon, Kayak, EVOgear and Let’sTalk.

The race for UGC video monetization is in full throttle and while it’s hard to pin-point a clear leader at this point, adap.tv is certainly positioning itself as a player to keep an eye on. VideoEgg and others are also strong contenders, and YouTube is the 800 pound gorilla.

Get the Flash Player to see this player.

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It also shows the steady maturity of Facebook from a college network to a full on world network, where friendships, business contacts, family and other types of relationships need to be more fully described. And this is also as much about privacy as it is about organization – users will be able to limit the information that certain friend groups receive.

A few existing applications are going to be affected, like Slide’s Top Friends application, the most popular third party app on Facebook. Lots of other applications will likely need to be tweaked to work properly when this launches (so many of them access the friends list). And this will shut down at least one “startup” we’ve been tracking that was creating this exact feature as an application. At least they can quit now and stop putting good time and money after bad.

Building Facebook applications is a big dice roll. If it’s too popular or too obvious of an idea (even if it hasn’t been done yet), Facebook is just as likely to compete with you as pay a few bucks and just buy you (they are probably more likely to compete with you than buy you, actually).

Some developers will probably wonder if getting a cash grant from Facebook’s just-announced fbFund will lessen the likelihood of direct competition from the company. Only time will tell.

Update: Wired is writing about a slew of Facebook ad networks and the almost inevitable fact that Facebook will be competing with them directly, too. We’ve covered most of these: SocialMedia, VideoEgg, Lookery, fbExchange, and RockYou. Also mentioned are Cubics and Appfuel. Lots of brave souls racing to build a business before Facebook comes in and stomps all over the scene.

VideoEgg started off as a white-label video host, powering some notable web properties such as AOL sites, Bebo, hi5, Piczo, myYearbook, Dogster, Tagged and others. They then quickly incorporated an ad network. Like many other video startups, they did it through overlay advertisements (Yes, before YouTube). Startups are experimenting with other video ad formats <a href="“>as well. VideoEgg has been driving “significant” revenue through their overlay advertising.

Recently they applied that overlay model to Facebook as a new ad network, helping users monetize videos and applications. They reportedly pay a healthy CPM (developers have reported ~$8-10 CPM). Other Facebook ad networks include Lookery, RockYou, SocialMedia, and FB Exchange.

VideoEgg wants to continue developing their ad platform, moving from an impression model to an engagement model, while making ads more social. Although they remain tight lipped on the plans, ad networks on Facebook aim to make ads more engaging by tying virtual rewards to user’s contributions.

VideoEgg has certainly been doing this for a year or so. In a comment to that post, though, an (unconfirmed) ex-YouTuber says the idea was “discussed long ago inside the company” and follows up with:

All other video sharing websites that came out around the time YouTube emerged were still using Quicktime or Windows Media. YouTube might as well accuse VideoEgg of stealing the idea of using a Flash video player.

Next up was Adbrite founder Philip Kaplan, who emailed me to say that Adbrite has had their own overlay product for nearly a year. He also pointed out that I wrote about it. The ad unit is less sophisticated, but it is certainly a Flash video overlay ad unit.

And finally, Brightcove CEO Jeremy Allaire sent me a long email saying they’ve been doing this as far back as October 2005. He also says the ad units are not particularly popular with advertisers:

I caught your post on VideoEgg taking credit for video overlays as an ad format vis a vis the latest YouTube ad product introduction.

To reinforce this point, while I don’t want to claim “invention”, we were certainly very well ahead of the market when we introduced video overlay ads back in October of 2005, just as YouTube was getting their first pirated episodes of The Sopranos on their site. At the Web 2.0 conference that fall, Brightcove debuted our beta service and as part of that both demo’d and discussed how we wanted to changing video and television advertising with new formats that could engage the user in a non-intrusive manner while creating opt-in ‘takeover sponsorship’ units that a marketer would be excited about. We demo’d overlay ads from Coca Cola running in a MTV Networks channel that we were just launching with them. The New York Times covered this debut.

We subsequently demo’d and introduced these formats again at AdTech in New York that fall, and if you speak with any number of a major content owner brand partners, it has been part of our platform since then, along with a wide range of other innovations in video ad formats, policies and targetting mechanisms.

Interestingly, despite having been 18+ months “ahead of the market”, to our disappointment, there has been extremely limited uptake by the advertising community around these formats. There are a lot of factors behind this limited uptake, including:

- the advertising community buying video have been very focused on leveraging existing creative and buying patterns in the online video space
- most content publishers and media owners have been focused on getting the ‘basics’ up and running, and also responding to the RFPs from marketers and advertisers, which are almost 100% focused on basic short-form video commercials
- for premium brands and content, the basic pre-roll and companion banners are yielding extremely attractive CPMs and there is little evidence that :15 ads have any negative impact on end-user viewership behavior — in fact, our own metrics show that sites that run without any ads, and then introduce :15 pre-rolls and banners achieve identical usage and performance (e.g. no drop-off in users because of ads) on their content.

Nonetheless, we remain very bullish about ‘composite’ video advertising formats that combine overlays and unique and non-intrusive calls to action with deeper interactive marketing experiences. We’ve been pushing this for years and only now are starting to see the publishers and media owners that we work with begin to take an interest in these formats. I believe this is because we’re now entering a phase where content companies are looking at ways to maximize yield and revenue within their content, and they are introducing more mid and long-form content which require, by economic necessity, a different suite of formats to deliver a good user experience.

So where does that leave us? Maybe none of these startups did – Om says it all goes back to old school television. We’ll see if VideoEgg’s patent filing is unique enough to be issued. But they’ve already said they won’t be using it offensively to stop others from doing this. The market will sort it all out.

cartoon credit: the amazing Hugh MacLeod

VideoEgg’s overlay advertising system has been in the market for a year and is driving “significant” revenue for the company. it’s so successful, in fact, that they recently launched a Facebook advertising network based on the same technology.

The idea is to use a Flash overlay advertisement with some basic information and graphics that takes up a small part of the viewable video area. Users click the ad and get a more in depth video ad. It’s less intrusive than a pre or post roll ad, and has far better performance than ads placed around a video. It’s likely to become the standard way ads are placed on video, even potentially on normal television as the thirty second ad spot continues to decline.

Given VideoEgg’s success with the unit it’s no surprise that YouTube has adopted the same format with their advertising. But it is surprising that YouTube failed to give even a passing mention to the company that invented the unit. VideoEgg also claims to have a patent application on this – something YouTube will certainly have to deal with down the road.

Nick Carr points out that much of the early press on YouTube was written by people who failed to do their homework. Carr trashes a CNET article that he says was basically an ad for YouTube. CNET subsequently changed the title of their article but there is still no mention of VideoEgg’s invention of the unit

Meanwhile, VideoEgg seems to be handling the situation well and taking advantage of the publicity. They added the graphic above to their home page, and are talking to press about their product. Suddenly, everyone is interested.

They launched in September 2005 as a way to publish video to the web from mobile and other devices. Soon they were allowing people to publish videos directly on the site, like YouTube. And they then aggressively pursued partnership deals to power the video feature on social networks and other sites. Today, they power video on 14 of the 20 largest social networks. And they also monetize those videos with a number of innovative ad units, sharing the revenue with partners.

Today VideoEgg is powering 680 million video plays per month, from 23 million unique users. They’ve built a large ad sales team to sell into those videos with flash pop-up ads that don’t disrupt video play but get in front of the viewer.

That ad sales team now wants more inventory. And so VideoEgg has morphed yet again. Their video business remains in place. But now they are leveraging that ad sales team to sell their flash ads directly into Facebook applications.

EggNetwork, A Facebook Ad Network

There are already at least three advertising networks aimed at Facebook applications – Lookery, fbExchange and a RockYou product. VideoEgg now jumps in the mix with EggNetwork, and they have an immediate and distinct advantage: a huge ad sales team with experience selling into big brand advertisers.

They’ve been quietly active for weeks, testing the platform and gathering data. The Flash ad units (example) don’t do much until you mouse over it, and then text is displayed along with a video clip or interactive game of some sort. CEO Matt Sanchez says that they are selling at above $10 CPM. And they will split revenue from the ads 60/40 with the application providers (60% to the application).

These ads will eventually be targeted demographically based on user data. For now, though, Facebook has put a use of most of this user information on hold as it figures out its strategy. When Lookery launched they had one set of rules in place in their terms of service. Now, they are taking a hard look at what data can be used by ad networks for free, and what should be used at all.

EggNetwork is clearly going to be an attractive option for larger application providers who don’t want to sell ads themself. VideoEgg already has a bunch of them using the service: Rock You, J. Squared Media, Graffitii, Renkoo and Flixster have all incorprated the ads into their applications. Early advertisers include Discovery Networks, Electronic Arts, Fox Searchlight, FX Channel, Paramount Pictures and Universal Pictures.

App-Camp 2007

VideoEgg is also hosting an event, called App-Camp2007, in San Francisco in late October. They’re promising a fun and informative environment for people to learn about application creation and monetization, and will be bringing in marketers and venture capitalists to make connections and provide further device.

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.

VideoEgg says it’s now serving 15 to 20 million video streams each day. US users consume about 230 million video streams per day, according to ComScore. You might remember that YouTube announced that it hit 100 million streams a day back in July. It’s bandwidth costs were already believed to be well more than $1 million per month by that time.

VideoEgg’s ad network, rolled out late last year and dubbed The Eggnetwork, claims to be the largest ad network for social media sites and it is undoubtedly substantial.  The company’s elegant and unobtrusive banner ads are a model that the rest of the industry is likely to follow.

The combination of white labeling video services for users and offering an ad network for B2B customers is a strategy that appears to be paying off uniquely well for VideoEgg.  It’s frequently discussed as a shining light in the video startup space that’s grown blurry post GooTube.

VideoEgg has received funding from August Capital, First Round Capital and Maveron.  The company was launched about 18 months ago by a team of Yale classmates whose decision to move to Silicon Valley was widely discussed as an example of the area’s continuing importance in the industry.

The UK continues to be Piczo’s biggest market, accounting for 40% of users and 50% of page views (see TechCrunch UK coverage of the company here).

Today at 5 am PST they will announce a number of distribution and other partnerships with major Internet companies, including YouTube, Flock, Photobucket and VideoEgg.

The most interesting partnership is the deal with Flock. Piczo will distribute a Piczo-branded version of the Flock browser (see a similar deal Flock announced in July with PhotoBucket). Flock and Piczo will split search revenue generated from the browser, and users will have easy access to Piczo content. From the press release:

When users download the Flock Piczo Edition browser, they will receive alerts when friends update their sites, providing an instant connection to their Piczo friends. Users will also be able to quickly and easily drag and drop content such as photos and videos into their Piczo Web page. Other features in the Flock Piczo Edition browser include access to bulk upload tools, uninterrupted login and web searching capabilities.

This is good news for Flock as well. They now have access to Piczo’s 10.5 million monthly unique visitors.

We’ve written about the company a number of times in the past because they’ve got a great technology and are clearly making important connections. They launched one year today at DEMO Fall in Huntington Beach. They’ve received funding from August Capital and First Round Capital. David Hornik from August is on their board.

These partnerships all make a lot of sense, as there’s no reason for social networking sites to lose their users to video uploading sites if it’s a service they can offer themselves by partnering with someone like VideoEgg. Watch for all of the above social networks to take a real leap in media richness once a large number of their users are adding video quickly into their content streams.

Grouper offers a similar functionality and was recently acquired by Sony for $65 million. Recording directly through the browser, making it simple, clean and easy – is obviously the kind of technology that’s increasingly in demand as the world of user generated multimedia content heats up.