Online Video Ads: Just Wait

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VideoEgg, a startup that distributes video ads in its own player across social networks, has been serving overlaid graphic ads with its video content. The company is working with close to 100 advertisers, including Rockstar Games and General Motors (GM), says Troy Young, VideoEgg's chief marketing officer. Young says new formats are necessary to keep from annoying audiences. "Pre-roll is a really challenging advertising execution in terms of meeting the needs of the community. You don't want to start off alienating someone," says Young. "We are trying to bring a variety of ad types to the market."

Making the Medium More Accessible

The new forms of online video advertising are only partly responsible for marketer interest in the medium. The other culprit is cost. Internet video is relatively cheap compared to the millions it can cost to produce a regular TV commercial and secure a 30-second network slot.

TurnHere, a startup that produces Internet videos for businesses ranging from the corner bistro to global hotel chains, can produce an online commercial for as little as $500, says Bradley Inman, TurnHere's founder and CEO. Producers of conventional TV commercials "spend more on the catering trucks than we do on the video," says Inman.

The company has 2,000 independent filmmakers around the world available to shoot films for local businesses. Many of TurnHere's commercials take the form of short documentaries about each business. Think of the concierge at a hotel showing users around the grounds. The ads can be featured on a company's Web page or on local search sites such as IAC/InterActive Corp.'s (IACI) Citysearch.com.

Internet advertising leader Google (GOOG) is also trying to make the medium more accessible. In May, it began distributing click-to-play commercials through its AdSense network, a group of Web sites that post ads in exchange for a slice of the revenue (see BusinessWeek.com, 5/24/07, "Google's In-Video Ad Experiment").

No doubt online video advertising still has a way to go before every business has an Internet commercial. But users should be prepared for the Web to look a lot more like TV.

Holahan is a writer for BusinessWeek.com in New York.