Figures Out How To Serve Ads In iTunes Videos

For most people, watching Web video is predominantly a streamed experience on their computers. But an important and substantial portion of Web video is still downloaded to be watched later, or transferred to a different screen (usually an iPod, but sometimes a flat-screen TV). The problem with downloads is that they don’t fit neatly into the advertising model that rules most other Web video.

Some companies try to charge for video downloads on iTunes, but many simply give away their videos for free as downloadable podcasts. (In fact, quickly browsing iTunes seems to turn up more free videos in at least the TV show category than paid downloads). Serving up videos on iTunes in many respects is a loss leader for many online video producers. They need to do it because their most loyal viewers subscribe to their shows through iTunes, but then they have trouble selling those very same viewers to advertisers. Arguably, these are a show’s most valuable viewers because they keep coming back for more.

Earlier today at the Beet.TV Online Video Summit (which I co-moderated with Cnet’s Dan Farber and Beet.TV’s Andy Plesser), CEO Mike Hudack revealed that his company has found a way to dynamically insert ads from DoubleClick into video downloads on iTunes and elsewhere. is a video publishing platform that claims about 50 million views a month across many different Websites and distribution channels. (Last week, it raised a round from Bain Capital). Hudack estimates that 15 to 18 percent of’s traffic comes through video downloads, mostly from iTunes.

For the past six months or so, has been experimenting with placing pre-roll, post-roll, and overlay ads in some iTunes videos. These ads are served by DoubleClick and have hyperlinks that make it easy to track when somebody clicks on an ad. This measurement only works when someone is actually watching the video on their computer inside iTunes, which Hudack estimates happens 50 to 75 percent of the time. For the rest of the videos that are watched on iPods, iPhones, and Apple TVs, whatever ad that was inserted at teh time the video was delivered will be shown, with no tracking capability.

But for all of those videos watched on a computer inside the iTunes player, instead of sticking in an ad that may become irrelevant in two weeks, can insert ads from ad campaigns that are currently running and which are targeted to the type of content people are watching. For instance, Puma was able to use to target women who watch golf-related videos on iTunes.

What is missing, of course, is the ability to insert and track ads on other devices such as iPods, iPhones, and TVs. As long as these devices are connected to the Internet, it should be possible to insert ads on videos watched on them as well. And surely there is a way to asynchronously insert ads and gather back tracking information for devices that connect only intermittently. Perhaps clicking on an ad while offline will generate a canned message, whereas clicking on it when online will serve up a new ad. There are many ways to do this, but in order for all of this video to be worth anything there needs to be a consistent way to serve ads against them, no matter where or how people are watching.

Update: Here is the clip from the roundtable, courtesy of Beet.TV.