Adap.tv and Vehix: Cross-Pollinating Media

Video ad insertion technology provider Adap.tv today received $10 million in series A funding from Redpoint Ventures and others. We’ve written about the company a few times in the past and are bullish on its dynamically placed inline video ads as a way to monetize online video content.

As with many emerging technologies and content delivery media (notably mobile), there is a great deal more usage than there is advertiser interest. In online video, this has had a lot to do with the challenges in contextually placing ads with video in a relevant yet nonintrusive way (explored in this past post).

Companies like Adap.tv, ScanScout and Blinkx are beginning to do some interesting things with dynamically placed inline video ads that utilize speech recognition technology to determine contextual relevance. YouTube has started to experiment with this as well.

Interestingly, the same technology development will serve to make video more searchable, given that video isn’t inherently searchable on its own the way text is. This is closely related to Google’s view of free DA – which also utilizes voice recognition technology – to push video search capability forward.

Vehix Gets More Interactive

This week I’m at the Vehix annual summit in Deer Valley, Utah, and yesterday I presented some trends in local search and online media, including the explosion of video and the opportunity for advertiser demand to catch up with users in lots of ways.

Through increasing demand for video, popularized mostly by YouTube, users are becoming more accustomed to watching video ads online, as explored in TKG’s recent video White Paper. This creates a great opportunity to bring video advertising with traditional strengths (influence, entertainment, ability to elicit emotional response) to more of an on-demand, pull-based environment of “lean forward” online search.

This brings video ad formats into a medium that has better direct response capability (although the “lean back” mode of watching a Chevy ad during an “American Idol” broadcast will still have an important place for brand building earlier in the buying cycle or purchase funnel).

To back up this claim, TKG data from the most recent wave of User View (explored in this past post) show that more than half of respondents who reported watching an online video clip reacted in some way, such as visiting a Web site or going to a store to check out a product.

User View Data: Response Rate of Online Video (click to expand)

Adap.tv’s technology, along with that of ScanScout and Blinkx, could push forward advertiser interest in these advantages by giving them a place to advertise that is more effectively integrated into video content.

Creating New Video Classified Products

Throughout the Vehix event so far, a pervasive theme has been the opportunity to bring auto advertising into more of a pull-based, on-demand environment across many media, including online, cable TV and mobile.

One product demoed brings in features similar to Adap.tv’s technology. The interactive TV product will have small inline ads that appear during live broadcast TV auto ads, which allow users to then “telescope” in, using their remote control to a Vehix module that allows them to search for and customize cars before viewing actual dealer inventory or request that a dealer contact them by phone.

This will take place in the cable television environment among other possible venues, utilizing relationships Vehix already has with cable providers, most notably its part owner and key strategic partner Comcast. This, along with the possibility of extending it to TV shows via product placement, resonated well with a panel of real life dealers that took the stage today.

“I recently picked up a Blue-ray disc player, which lets you do really cool things such as drill down to information on actors and things,” said Reuben Muinos, business alliance manager of L.A.-based Gaipin Motors. “This same thing applies to autos. If you can enable interactivity with content that can drive you back to a Web site, that will be the next wow factor.”

A Trend Beginning to Take Form

After seeing the interactive TV demo, I thought immediately about Adap.tv, only to return to my hotel room and see the headline that the company has received its first major cash infusion and vote of confidence from the investor community.

It’s an appropriate news item, telling of the investments being made to appeal to advertisers with video distribution methods that allow them to follow the influx of eyeballs set on this new medium in more interactive ways.

It’s also interesting to see video content moving to the Internet, while online interactivity is brought to the television experience. This cross-pollination will continue to see lots of investment and experimentation, and it will be interesting to see products take form.

This is at the forefront of the user-centric trend (also somewhat evidenced in Google’s Universal Search) that all forms of content should be available in all places. This is a far cry from the traditional paradigm – present not too long ago – of content being siloed in a mutually exclusive way in either newspapers, television, Yellow Pages, radio, telephony (411), online, etc.

Stay tuned for more announcements, and a more thorough recap of takeaways from the show.