July 9-10, 2013
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Cameron Yuill is the Founder and CEO of AdGent Digital.

Video advertising will double approximately every two years until all online ads will be video ads. That’s right — all online ads will be video.

I am calling this prediction “Cam’s Law” (after moi) with due respect and deep regard to Intel Founder Gordon E. Moore, who in 1965 predicted that the number of transistors on integrated circuits would double every two years thereby exponentially increasing computing power.

Trust me, it does not take a genius to see the trends. My prediction is firmly guided by data. comScore’s recently reported that Americans watched 11.3 billion video ads in December, setting a new peak, and a sharp 10% rise from November’s 10.3 billion. December 2012 ad views were twice as many as in January 2012, representing 59% year-over-year growth. Video ads accounted for 22.6% of all videos viewed in December, and 1.9% of time spent viewing video online.

But That Was Last Year

Now three months into 2013, I feel ever more confident about Cam’s Law given the astronomical speed at which video advertising has grown in popularity. All signs point to the death of banner and static ads. Here’s why:

1. Consumers love video; not just cat MEMEs, but original content. And they watch a lot of video online. Nielsen says Americans spent more than 360 billion minutes online in December 2012 and streamed 24.6 billion videos.

2. Consumers watch video ads. After 60 years of television we have learned to watch the ads to get to the content. Yes, we know you want to get to your show, but often the ads are entertaining, visual and mercifully brief – and getting more interactive by the day.

3. Advertisers like video ads because consumers watch them. From August this year, market research company Nielsen will validate the astronomical shift to online video by including video viewed on tablet and mobile devices in their ratings measures. This will provide advertisers the data they need to shift their spend to online video in even greater numbers.

4. Consumers are buying (lots of) tablets. The global market for tablet computers surged 78.4 percent last year, according to research firm IDC, and sales are on schedule to pass PCs by 2017.

5. Tablets & smart phones make watching video easy in the bedroom, train, couch, park bench, and, ahem, bathroom.

6. Tablets make shopping easy and you can bet your last dollar that online retailers took notice last Thanksgiving and Christmas, so expect a monumental change in online sales strategies this year and increased consumer purchases via mobile and tablet.

7. If consumers are buying on their tablets, guess where advertisers will want to run their ads?

8. 4G will make watching video anywhere seamless. Did someone say “conversation killer?”

9. Banner ads do not work, but you already knew that.

Advertisers can’t ignore the numbers

As advertisers are beginning to embrace tablet advertising, in virtually every case they want video in their ad units. Consumers are watching those video ads hundreds of times more than they are clicking on banner ads.

While display and banner advertising were yesterday’s stepping stones for advertisers to enter the digital market, video is where the real action is.

Watch this space.

In 2014, we will review Cam’s Law to see where the market is; and we’ll do it via video because we know you will watch that. On your tablet.

Original TV image via Shutterstock

Cameron Yuill is the Founder and CEO of AdGent Digital, the company behind AdTouch™, a patent-pending HTML5 tablet ad platform for the creation, management and analysis of ad units on tablets for the mobile web.

July 9-10, 2013
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Taboola, not to be confused with the Middle Eastern cracked wheat salad tabouli, is adding additional dollars to its mix.

Taboola provides a video content recommendation platform. Its marketplace has marketers and brands on one side, who bid to distribute their content on top publisher sites, and algorithms on the other side, to match content with the most relevant users and predict what they want to watch. Brands and marketers use the technology to maximize their reach and optimize audience engagement.

The company compares its service to Twitter Promoted Tweets or Facebook Promoted Stories. It serves 1.5 billion recommendations daily on sites including Time.com, NY Times, Fox Broadcasting, USA Today, Bloomberg, The Weather Channel, and BusinessWeek. Taboola helps publishers “re-circulate” their own traffic by generating on-site content recommendations. (VentureBeat uses Taboola, whose recommendations appear at the bottom of every story on our site.)

Video advertising is expected to be a major trend of 2013. The technology surrounding video production and distribution has made online video ads a powerful option for businesses and consumers alike. Furthermore, studies show the more targeted the ad, the more effective it is. Taboola is capitalizing on all these trends.

After experiencing significant growth in 2012, largely spurred by the $10 million round Taboola closed in June, this funding brings the total capital raised to $25 million. Israeli firm Pitango VC led the $15 million investment, with participation from existing investors Evergreen Venture Partners, WGI Group, and Market. Taboola is based in New York City.

Read the press release. 

Photo credit: Annie Mole/Flickr

July 9-10, 2013
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Y Combinator seed rounds are getting so big, they seem more like Jack’s beanstalk than the beans that sprouted them.

Billing itself as the “video ad network for the modern age,” Virool has raised a whopping $6.62 million “seed” round, the largest round in Y Combinator’s history.

Considering the size of the round and the inclusion of institutional investors, calling this a “Series A,” or the first round of institutional funding, may seem more accurate. However, founder Alex Debelov said the entire round was raised in on covertible debt and Virool is not taking any members on its board. Hence, it is a seed round.

Virool offers a self-service social video advertising platform to make video content go viral. Advertisers can use it to blast their content out to multiple online publishers, who get paid for the videos they show inside their properties. Developers can also integrate Virool’s API into their apps to more easily execute wide-reaching video advertising campaigns, and companies have access to real-time analytics to track their success.

According to Debelov, many social video ad platforms require a minimum of $100,000 to promote sponsored video content, which makes it inaccessible for smaller advertisers. Using Virool, anyone can start a video campaign for as little as $10 and only pay for the ad when someone watches their content for 30 seconds or longer.

Video advertising is predicted to skyrocket in the upcoming year, a trend investors are clearly paying attention to. Since launching in March, Virool has grown from 200 to more than 30,000 customers, ranging from independent artists to large corporate clients like Intel, Samsung, K-Swiss, Sony, and Orbitz. The platform apparently reaches 750,000 people a day and more than 22 million a month.

The list of contributors include big names in venture capital and angel investing, and Virool will use the funds to meet high demand for its product. Institutional investors include Thomvest Ventures, Menlo Ventures, Draper Fisher Jurveston, Yuri Milner, Phenomenon Ventures, TMT Investments, DominateFund, and FundersClub. Individual investors include Sam Altman, Paul Buchheit, Troy Carter, Dave McClure, Farzad Nazem, Erik Moore, and Garry Tan. Virool was also the first company to officially receive investment from online investing platform FundersClub.

In October, FundersClub broke Y Combinator’s record with its $6 million round, which was subsequently broken by ZenPayroll’s $6.1 million raise in December. And let’s not forget about YC startups Pair, Ark, and SocialCam which all raised over $4 million in seed funding.

Many in the startup community advise against huge seed rounds because it involves giving away significant equity and freedom early on. Ironically, Virool investor Dave McClure spoke just last week about the importance of not taking excessive amounts of seed financing and keeping valuations in check. Often in the bubble that is Silicon Valley, people in all parts of the ecosystem focus too much on fundraising and equate large investments with validation or success.

Only time will tell if this funding lifts Virool up to the new heights, or if it gets crushed by the weight of the beanstalk.

Check out Virool’s video called “The Secret of All Viral Videos” to learn more … kind of.

July 9-10, 2013
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TubeMogul snagged $20 million in its third round of financing.

TubeMogul is a platform where brands can buy video ad opportunities in real-time. Real-time bidding and video advertising have become increasingly popular over the past couple years, and TubeMogul’s technology helps brands get the most out of the buying process.  The platform was “built for branding,” meaning it was designed with marketers’ needs in mind. Advertisers maintain significant control over their campaigns and receive reports about their impact.

This investment was led by Northgate Capital, with participation from existing investor Trinity Ventures and Foundation Capital. The money will be used to hire more people and make technological advancements to the platform.  It brings TubeMogul’s total capital raised to $35 million to date. Read the press release on TubeMogul’s blog.

Viral videos are not just about cute cats anymore.

Video platform Virool billed itself as a “video ad network for the modern age” today during its pitch at Y Combinator’s Demo Day.

According to founder Alexander Debelov, video is by far the most engaging and effective way to communicate information to the masses. Virool lets companies distribute their video content across multiple online publishers, which boosts views and exposure for the companies. Rather than stagnant banner advertising or lightening-quick video clips, Virool’s platform promotes videos that tell the stories of a company, service, or product.

Developers integrate Virool’s API into their apps to deliver relevant videos to their audience. The technology makes it easier to execute successful, wide-reaching video advertising campaigns. Advertisers can also benefit from tracking who is watching their content, and from where, in real time.

The platform already works with thousands of advertisers and is adding more every day.

“Every time a new ad unit is invented, a company is made,” said Debelov. “Banner ads made Yahoo, search ads made Google, and video as an ad unit makes Virool.”

This is quite a lofty claim, although it’s based on impressive traction.

Advertisers have been able to quadruple their money after using the platform, and 78 percent of clients are repeat customers. The success translates into dollars for Virool, as well as for companies. It makes 12 cents every second and has seen impressive growth. It made over $240,000 in July — and $150,000 in first week of August alone.

July 9-10, 2013
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At VentureBeat, we come across a lot of funding news every day. In order to bring you the most information possible, we’re rounding up the quick-and-dirty details about the funding deals of the day and serving them up here in our new “Funding daily” column.

HIRO Media grabs $5 million

Online video advertising service HIRO Media raised $5 million dollars from undisclosed investors Tuesday. The six-year-old company uses TV ad tactics to create high-grossing ads and offers analytics to track their performance.

Real Valuable Corporation raises $2.5 million

Store catalog app maker Real Valuable Corporation closed a first-round $2.5 million in funding. The company’s iPad app, CoffeeTable, lets you browse store catalogs without an Internet connection. Shoppers can also make offline purchases of items they see in each catalog without leaving the app to go to another site. Print company RR Donnelley led the round.

Pertino Networks snatches up $8.8 million in cash

Cloud networking service Pertino Networks raised $8.8 million. Its still-in-beta service will offer cloud networking for enterprise IT. Norwest Venture Partners and Lightspeed Venture Partners led the first institutional round for the company.

Cloud-based video production company Aframe gets funding

Aframe announced its first funding round Tuesday, for $7 million. Octopus Investments and Eden Ventures led the round, with participation from existing investor Northstar Ventures. Aframe offers cloud-based video production software, so videographers can do work on the go.

BigDoor raises $5M for gamification platform

BigDoor has raised $5 million in new funding from the Foundry Group. The platform allows non-game online publishers to “gamify” their web sites by adding game mechanics that improve user interaction and engagement.

The Minerva Project raises $25 million

Attempting to build an elite university, The Minerva Project just announced it has raised $25 million dollars in seed funding from Benchmark Capital, the largest seed round the venture capital firm has ever invested. The company is building a new kind of university for students around the world.

Small business community Manta grabs $44M

Tuesday, small business community Manta raised $44 million. The company helps small businesses gain visibility and attract new customers, as well as create a community of small business owners. Norwest Venture Partners led the round.

Skout raises $22M for mobile flirting app

Five year-old Skout has raised $22 million in funding from Andreessen Horowitz. The company has produced a location-centric iPhone dating app to connect busy young singles.

Nitro nabs funding for PDFs

Australian-founded Nitro raised $3.5 million for its PDF editing and signing software. Starfish Ventures led the round for the seven-year-old Adobe competitor.

If you’ve got any funding news to send out way, email tips@venturebeat.com. 

July 9-10, 2013
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Social-media video advertising company Jun Group has secured $2.5 million in funding from Western Technology Investment (WTI).

Jun Group specializes in making video advertising for social media sites such as Facebook and YouTube. The company focuses on transparent advertising and doesn’t use pop-up windows or auto-play to force its video ads on you. Instead, you can choose to press play and watch a video from an advertiser. Jun Group offers targeting and analytic services to help clients find the right audience for their product, and its Voyeur dashboard lets clients track video views, comments and ratings.

Investment partner Dan Holman, from WTI said in a statement, ”Online video advertising is a significant and rapidly growing opportunity, but, most importantly, it is ripe for innovation. Jun Group is a clear leader in the space. They’ve set the standard for opt-in, performance-based video, and our partnership delivers the financing to aggressively capitalize on this opportunity.”

This round of funding will be used to further develop Jun Group’s sales, business development, and client services team, as well as improve its distribution and analytics technology.

Jun Group was founded in 2005 and maintains offices in New York and Los Angeles. Its clients include Disney, FritoLay, Nike and Coca Cola. Jun Group joins the ranks of social media companies that WTI has funded which include Kosmix, myYearbook, Plaxo, StumbleUpon, Ustream, Youku and Facebook.

July 9-10, 2013
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YuMe, a video advertising network, has raised $11.9 million in funding, according to a Form D filed with the SEC.

A YuMe spokesperson told VentureBeat the company is not ready to comment.

YuMe connects advertisers and video content creators, so videos appearing on mobile devices, computers, or connected televisions can include advertising revenue in their monitization plans. It uses the “ACE Relevance Engine,” which pairs relevant video content to an ad with the right message. This is difficult because ad copy can’t be matched with keyword-rich text. Instead it is a much more fluid form of content, making it harder to identify the right areas to place ads.

The funding comes from YuMe’s previous investors Accel Partners, Menlo Ventures and Khosla Ventures. Also on the form D are YuMe’s Co-Founder & chief executive officer Jayant Kadambi, co-founder and chief technology officer Ayyappan Sankaran,  chief financial officer Timothy Laehy, and chief revenue officer Scot McLernon. The form also states that the deal was made in both common and preferred stock.

Other video advertising companies are also getting funding, such as BrightRoll, which announced a $30 million round of funding today. The industry has seen some action lately, with YuMe also recently announcing a dedicated advertising product for YuMe and LG Electronics’ connected televisions. This gives developers creating applications for internet enabled televisions the opportunity to gain advertising revenue in lieu of other forms of monitization.

Blinkx, a video search website, also contributed to the video advertising sphere recently with its acquisition of Prime Visibility Media Group, an advertising agency, which bolsters Blinkx’s existing video advertising program, AdHoc.

YuMe was founded in 2004, and has headquarters in Redwood City, Calif. with offices in the UK and around the U.S. The company’s investors include Accel Partners, BV Capital, DAG Ventures, Khosla Ventures, Menlo Ventures and Intel Capital.

July 9-10, 2013
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Adobe has acquired video advertising platform Auditude, the companies announced today. [Update: While financial terms of the deal were not publicly disclosed, Adobe is said to have paid close to $120 million (mostly in cash) for the startup, according to sources familiar with the matter.]

Auditude allows its clients to manage and monetize advertising around premium video content. Its service lets publishers and media companies create high-quality advertising experiences across multiple platforms and devices. The company’s clients include Comcast, Sony Music and Universal Music Group.

“We felt that Auditude was really a market leader, not only from a technology perspective, but also in the way that they look at the market,” said Adobe Vice President and General Manager of Media Solutions Todd Teresi in an interview with VentureBeat. “Auditude is not only focused on video, but alternative devices as well … connected devices like tablets, smartphones, gaming consoles.”

“At Adobe, we really see those devices as the future of video growth and premium content,” Teresi said in response to a question about what makes Auditude stand out over other video ad platforms.

The acquisition will allow Adobe to provide a complete “end-to-end” experience, meaning its clients will be able to create, publish, monetize and optimize videos from one place. The company said it plans to integrate Auditude with its other products, such as Adobe Digital Marketing Suite, Adobe Flash Media Server and Adobe Pass. The integration is tentatively scheduled to begin rolling out in early 2012, according to Teresi.

Founded in 2007, the Palo Alto-based startup previously raised a total of $38 million in funding to date from Redpoint Ventures and Greylock Partners.

July 9-10, 2013
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Video advertising platform Innovid has raised a new $9.5 million round of funding, the company announced Wednesday.

Innovid’s iRoll ad service embeds interactive elements in pre-roll video ads to make them dynamic and engaging to an audience. The company also provides an ad server and analytics service called DYNAMO. Founded in 2007, the New York-based startup’s services are used on campaigns for many popular brands, including Disney and Sony.

The new round was led by Sequoia Capital with participation from existing investors Genesis Partners and T-Venture (Deutsche Telecom). Also, Gili Raanan of Sequoia Capital will assume a seat on Innovid’s board of directors.

Innovid said it will spend the additional capital on an aggressive growth strategy centered on making the company’s advertising service to international markets.

This new round brings the startup’s tally to $17 in total funding to date.

Screenshot example of Innovid’s iRoll campaign via Innovid

July 9-10, 2013
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Israeli online video advertising startup Eyeview has raised $1 million in its second round of funding, with notable involvement from former Google CEO and current Chairman Eric Schmidt.

Schmidt’s investment will go a long way to raising the profile of this startup, and his interest in it shows that monetizing online videos is still an unsolved problem.

The startup, founded in 2007 by Oren Harnevo and Tal Riesenfeld, offers technology which lets online video advertisers target their messages by showing personalized ads based on location, demographic, time, weather, and browsing history. According to Israeli business news publication Globes.co.il, it plans to use its new capital to market its product in the U.S. and hire new employees.

Around half of the $1 million round comes from Schmidt’s investment firm, Innovation Endeavors, which previously put in $1M into its initial $5 million round. This brings his total involvement in the startup to $1.5 million.

Eyeview is headquartered in Burlington, Massachusetts with a main development center in Tel-Aviv, Israel. Other participants in the round included previous investors Gemini Israel Funds, Lightspeed Ventures, and Gigi Levy.

July 9-10, 2013
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140Fire, which slaps interactive advertisements like polls on streaming video, announced that it is launching today at the Launch Conference in San Francisco.

The advertisements pop up like most other advertisements do on videos — as a small bar at the bottom of the video. But instead of linking viewers to a different site, the advertisement features a poll or a number of questions that viewers can answer as they continue watching the video.

For example, a Greygoose Vodka ad would pop up during a scene on Mad Men that features cocktails. Viewers can answer a few quick questions and get a suggestion about which drink — which naturally features Greygoose Vodka — they should make. The advertisement also shows which of the viewer’s Facebook friends have taken the poll and what drinks the advertisement suggested to them.

140Fire can also deliver some more targeted advertising post-roll advertisements based on the polls that appear in the video. If an advertisement pops up that asks the viewer what kind of car they prefer, the post-roll will be an advertisement that features the car they selected. The idea is to deliver more targeted post-roll advertisements that — again — don’t link back to another site but still get the point across.

The company can also slap advertisements and polls onto live video streams like ESPN3, which features live sports events. 140Fire users can modify the polls and advertisements in real time as well — so they can tailor the advertisements to the specific sporting event. For example, a 140Fire user can modify a poll to ask how many free throws a player will make when they step to the line.

That seems like it’s the best application of the technology, said All Things D’s Kara Swisher, who was an adviser at the Launch Conference. She said the advertisements would also go well with other live events like American Idol — but they probably wouldn’t be welcome on sites like Hulu, where the content is static.

140Fire also features an analytics dashboard that shows what demographics accessed the advertisement and what kind of answers they chose. The respondents are broken down into age range, whether they are male or female, and a number of other specific demographics. The site doesn’t work with YouTube yet, though they are in talks with the company.

It looks like 140Fire is a graduate of Y Combinator’s winter 2010 class. It was originally called 140bets. Mark Cuban, Robert Kraft and Skip Paul have all invested in 140Fire.

The research firm estimated online ad spending in the U.S., projected at $25.8 billion for 2010, will grow to $28.5 billion by next year, $32.6 billion by 2012, $36 billion by 2013, and $40.5 billion by 2014. The projections were calculated by performing a meta-analysis of research estimates by firms tracking ad spending.

The dramatic rise over the next few years, the firm predicts, is due to the fact that even as the economy takes an upward trajectory, big-brand marketers are likely to continue a shift to Internet advertising over older forms, increasingly acknowledging it as the dominant platform for U.S. consumers to spend most of their time and consume content.

Now that the average YouTube viewer is consuming close to 4.5 hours of video every month on the site, Google is finally beginning to reap its dues from its $1.65 billion buyout four years ago. And this aggressive push to increase monetization on the site will lead many more advertisers to join the online video-advertising bandwagon. The format is predicted to remain the fastest-growing of all through 2014.

Meanwhile, search advertising is still leading in terms of actual dollars: As Google’s main source of revenue, ads on Google’s own properties bought in $4.8 billion in the last quarter.

But it’s spending on social networks, the current buzz of the town, which has some catching up to do. Hitting around $2 billion this year, ad spending on social networks still makes for a measly 6 percent of total online ad spending. Marketers may talk about their social media strategy and create Facebook pages and Twitter profiles for their brands, but it seems most of that is yet to be converted into real advertising dollars by its major players.

That may change, largely thanks to Facebook, whose audience of 500 million-plus users is large enough to be attractive to brand advertisers. The company is now ramping up its selling efforts, including rumored plans to lease a large office directly on Madison Avenue to house a growing army of salespeople.

At a time when online viewers are fickle with their attention and video providers are burdened with finding ways to monetize that attention, this is the latest in a slew of video advertising experiments.

When an ad begins playing, a countdown timer will appear for five seconds, after which time the viewer may press a button on the top-right to skip the ad. If they choose to skip an ad, they’ll be jumped to their content — no questions asked. Alternatively, the advertiser can present the viewer with a choice of ads and let them choose the one to watch, a technique that has been used by competitor Hulu for some time.

The idea of a skippable ad may sound counter-intuitive at a time when the lack of a TiVo-like fastforward button on the Internet is seen as a holy grail for advertisers, but YouTube will only be asking advertisers to pay for ad views in which the viewer doesn’t skip the ad. Which means they’ll only be paying for potentially interested ad viewers who are more likely interested in their product.

Last year, YouTube found in an experiment that as many as 70% of viewers abandon videos when confronted with a long pre-roll ad. So, the idea of a skippable ad, even if it doesn’t lead to an ad sale for YouTube or impression for the advertiser, will at the very least work toward ensuring another viewer isn’t abandoning the video sharing site.

Worth noting is that YouTube is only offering the TrueView choice to advertisers, who can still choose to use the traditional ad format. While there are only a handful of videos that are currently making use of TrueView, the number is likely to grow as more advertisers begin experimenting with the format.

July 9-10, 2013
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Sharethrough, a video ad startup that has assembled an impressive team of investors and advisors, just announced that it has raised $5 million in its first round of funding.

The San Francisco company says it’s not just another video ad network. Instead, as the name implies, it’s focused distributing videos in a way that maximizes viewer sharing — not only does that increase the number of eyeballs, but Sharehtrough says that viewers who watch a video because it was shared by a friend will watch for three times longer than they would watch a paid commercial, average.

In the funding press release, Sharethrough says the old method of creating social video hits was basically “post and pray.” The company replaces that with features in areas aimed at making the process more reliable: It starts with video ads that include sharing features for social networking sites and elsewhere; those ads are then pushed to Sharethrough’s network of social websites, games, applications, and advertising exchanges; they’re tracked on an analytics dashboard; advertisers get detailed data about who’s watching and sharing their ads; and Sharethrough also reaches out to video sites and blogs to attract additional coverage.

The company has performed more than 200 video ad campaigns for brands like Sony, Xbox, and General Motors — you can see sample campaigns here.

North Bridge Venture Partners and Floodgate, the new fund from well-known angel investor Mike Maples, Jr., led the investment. Sharethrough’s previous angel investors included Ron Conway, Ron Bouganim, Steve Blank (an occasional VentureBeat columnist) and, Rapleaf chief executive Auren Hoffman. It also has an advisory board that includes Dave McClure, Eric Ries (who developed the Lean Startup concept), former Adaptive Path CEO Janice Fraser, Taz Patel, Mozes CEO Dorrian Porter, and Attributor CEO Jim Pitkow.

July 9-10, 2013
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A new report sponsored by the Internet Advertising Bureau paints a hopeful picture of the online ad landscape during the first six months of 2010. Ads earned a record $12.1 billion during that period, a new record and an 11.3 percent increase above revenues in the first six months of 2009.

Drilling down a little, the second quarter of 2010 (April, May, and June) also saw record revenue of $6.2 billion.

As the overall ad revenue grew, the breakdown between different ad formats remained mostly the same. Search advertising still dominated in the first half of 2010, accounting for 47 percent of revenue, followed by banner ads with 23 percent. Video ads still only make up a small piece of the pie (5 percent), but they’re growing fast, with revenue up 31 percent compared to last year. (A trend that video ad networks said they’ve been seeing for a while now.)

PriceWaterhouseCoopers conducted the report for the IAB. In the report press release, PWC’s David Silverman noted that 2010 was bound to look good compared to 2009, when advertising was just beginning to climb out of the hole it fell into following the 2008 crash. But he added, “With double digit growth in both search and display during the first six month of 2010, the long term prospects continue to be strong.”

[top image via Flickr/Alejandrooo]

July 9-10, 2013
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Nice timing. Just a few hours after The New York Times reported that YouTube’s ad revenues have grown to the point that the Google-owned video site will be profitable this year, I spotted a video that demonstrates some of YouTube’s potential as an advertising platform.

Called “A hunter shoots a bear,” the video was apparently uploaded last month, but it starting to get noticed by sites like Metafilter today. It’s an ad for Tipp-Ex brand correction fluid, reportedly created by French agency Buzzman. It features a hunter refusing to shoot a bear, reaching outside the video to grab Tipp-Ex from the ad running alongside, then using Tipp-Ex to change the video title. He asks the viewer to offer suggestions about what happens next, and acts out those suggestions.

It’s definitely possible to stump the ad with words or phrases that it doesn’t understand, but it recognizes (and plays videos to illustrate) a lot more words than I expected. (My favorite so far: “A hunter is a bear.”) And if you’ve got a dirty/sophomoric mind, Tipp-Ex has you covered, too.

These kinds of interactive ads aren’t unprecedented. The most well-known example is probably the Subservient Chicken, a Burger King ad (that ran on its own site, not YouTube). The Old Spice YouTube campaign from earlier this year was another illustration of how humor and interactivity can lead to hits. But YouTube has struggled with attracting expensive, premium advertisers in the past — I think the Tipp-Ex video offers a great counterexample of how advertisers can actually use the site to their advantage.

You can view the video at http://www.youtube.com/tippexperience/.

AdFrames  allows advertisers to insert a second advertisement behind a first video ad, or “roll.” Each secondary ad is placed with a three-second countdown in the first ad’s upper left hand corner. See top screenshot.

When you mouse over the video add for three seconds, a second pane opens up, with more ways for the advertisers to engage. In this case, a video ad for Subaru also has an embedded app that shows me Subaru dealerships in the Bay Area once I’ve let the countdown engage. See second screenshot.

VideoEgg is offering up five different types of services to advertisers. They have named them as follows:

LIVE: This allows advertisers to insert RSS feeds into advertisements, and continuously update them without needing to reformat the whole ad. In the demo I saw, this meant that, for example, ads for the NBA Playoffs could have updated information about when and where to catch the next game.

LOCAL: By deriving your zipcode from your IP address, VideoEgg can also serve up psuedo location-based advertising, such as in the Subaru mapping applicaiton above.

RICH: This  means that multiple videos can be embedded into a single video ad. For instance, a video ad for the upcoming move Journey to the Center of the Earth can, once the rollover has been activated, also have behind-the-scenes featurettes for the curious moviegoer.

SHOP: An online e-commerce mini-store to be embedded in the ad. A video ad for AT&T, for example, could also deliver a single-pane shop, allowing you to browse through phones, see prices and options, and quickly deliver you to the checkout page.

SHARE: The least exciting option, in my opinion, this allows you to embed the video on a web page or share it via a variety of social networks, such as MySpace or Facebook.

The platform itself is surprisingly easy to use. The three-second countdown removes the annoyance of having videos pop up when my mouse accidentally stumbles over an ad. The widgets, once the ad is engaged are, for the most part, bright and good looking. You can play around the platform yourself at the VideoEgg Ad Lab site. I did find that one of the ads simply didn’t play at all for me on both Firefox and IE.

This is all part of VideoEgg’s broader ad strategy, announced this April, of charging by engagement rather than impression. Traditionally, advertisers are charged for every 1,000 impressions served (normally called cost per mille, or CPM, advertising). VideoEgg’s self-styled “Cost Per Engagement” pricing means that advertisers pay nothing until a consumer mouses over the video ad for three seconds and has the second pane open.

According to Troy Young, the Chief Marketing Officer at VideoEgg, the company is serving up over a billion impressions every month. He demurred to state how many engagements are resulting in, however.

The company has its eyes set on big prizes. VideoEgg is already working with many top-tier brands, such as Disney and Miscosoft, while also building out an ad network over major websites. There’s a rumor that the company is only willing to partner with websites serving up at least 10 million video streams per day (for reference: YouTube is said to serve up 100 million a day).

This is the latest strategy for a company that has changed its feathers quite often. VideoEgg began as a video editing and publishing site, but shuttered that site in May of this year, and is now focused on developing a video ad network.

[Full disclosure: I worked briefly at VideoEgg in the winter of 2006, spending three days reviewing user-submitted videos for objectionable content. During those three days, I saw some videos foul enough to make the most anonymous of 4Chan users blanch.]

The company has received rounds of funding from August Capital, First Round Capital, Maveron, WPP, and Focus Ventures.