marketers a new way to monetize on online video.
Even online video mammoth Google/YouTube hasn't successfully
implemented a way to extract revenue from its billions of user
generated videos. A number of sites have taken to inserting "pre-roll"
ads into the videos they offer — ads that viewers are forced to sit
through prior to watching the featured content. But the big video
sites haven't adopted pre-roll ads, and for good reason: They don't
work, and neither have contextual banner ads so far.
Enter Overlay.tv. The Toronto, Canada-based company offers a
destination where marketers and users can place "overlays" of content
onto videos streamed from more than 20 online video sites, including
YouTube, metacafe, videojug, and others (it streams the video and
doesn't actually store it on its servers for copyright reasons).
Marketers and users using the platform can then overlay selected
videos with pictures, words and graphics that link to products or
information on external websites.
So take a video clip of, say, Fashion Week in New York City. A
marketer could link a certain shoe or dress in the video to a purchase
point to buy the item. It can then embed this overlaid video in blogs,
websites, and MySpace profiles. Overlay.tv has also launched a
Facebook application that lets users access its platform directly from
Facebook.
And unlike pre-roll ads, viewers can opt out of these overlay ads if
they choose to, the company says.
In one example you can link to here, you'll see a video clip called
"How to Be the Perfect Boyfriend." Overlays in the video link viewers
to how-to books, flowers.com and other relevant vendor sites.
Overlay.tv generates revenue from its more than 600 affiliate
partners, including Amazon, iTunes, and Walmart, through
cost-per-action and cost-per-click at about 5 to 12 percent revenue of
what the merchant makes on merchandise sold through click-throughs.
Overlay's users also get a share in the revenues. The company says it
distributes anywhere from 25 to 50 percent of this form of revenue to
its users.
Overlay.tv also plans to generate revenue through partnerships with
online video destinations as well as media companies, such as record
labels. It's currently at the contract stage with a major company in
the online video space and a major record label interested in
licensing the Overlay platform, although CEO Rob Lane wouldn't name
the two companies. The companies would theoretically integrate
Overlay's platform into their sites, so that users and marketers would
have the same ability to link advertisements directly to the video.
The majority of online advertising is focused on professionally
produced content, Lane says, while no one has successfully advertised
through user-generated content. To illustrate his point, he gives an
example of a user watching a mountain biking clip. This user may not
be interested in a toothpaste ad because it's irrelevant to mountain
biking, but he or she may want to know the exact make and model as
well as the cost of the bike used in the video. The only way to market
effectively is to bring the user in, Lane says.
Many big brands would like to advertise through user-generated
content, but they don't know how, he says. The Overlay platform could
also help marketers find out how effective a product placement is in a
video by tracking the analytics Overlay provides.
Overlay.tv was formed in mid 2006 and received $4.6 million (Canadian)
last November from Canadian VCs Celtic House Venture Partners
, Edgestone Partners and Tech Capital.
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