So the big question of Web 2.0 is how to monetize the online video. Revver has tried to embed an add at the end of the video, Metacafe serves pre-roll, and VideoEgg has an ad overlay that plays during the life of the video. Recently served up are Adap.tv which provides some type of contextual ad placement in the bottom of its player as the video is streaming (via Mashable), ScanScout (via TechCrunch) offers contextual text overlays on the video, and more recently YouTube announced their inline and post roll advertising method. (via Mashable).
Are video overlays the way to go? Possibly they could be. However, YouTube's demo doesn't make too much sense. As Michael Arrington notes, the ads served up via YouTube are not relevant to the video at hand and its way too easy to ignore them, while Mashable has the opposite view point. I'm not agreeing with either since I still feel that video ad models are interesting but as a user they are still ads. I'm a true believer that content is king and integration of the advert with content is the best way to go. Remember when Alias was sponsored by Nokia? Or the obvious product placement at BMW Films? I think that advertiser sponsored shows really build goodwill with audiences AND if an element of product placement is involved, great recall of products. However, while I am writing this I know that many are citing the huge bust of Bud.tv. Some products are definitely trickier than others.
However the question if video overlays work remains. And only time will tell. I think though that video overlays are a step in the right direction toward interactivity. As I previously mentioned, video games are the most interactive of movies where you make a decision nearly every second (or several times per second). As TV watchers, an extremely passive activity, we are not used to interacting with anything, whether it's ads or any other type of clickable. Video overlays are bringing us one step closer to that next generation.
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