Digital Media

NEW YORK--Broadcast network CBS will be advertising its fall TV season with a video-chip ad embedded in an issue of Entertainment Weekly.

The September 18 issue of the Time Inc.-owned magazine will feature the first video ad to appear in print, George Schweitzer, CBS marketing president, said Wednesday at a press conference at the company's headquarters here.

The ad with embedded video.

(Credit: Caroline McCarthy/CNET)

The ad will be launched in partnership with PepsiCo to promote Pepsi Max soda and the TV network's Monday prime-time lineup. Not everyone will be seeing it: the ad will appear in a magazine insert sent to subscribers in the New York and Los Angeles areas--an edition without the video chip will be sent to subscribers elsewhere and show up on newsstands.

The technology for the battery-powered ads was manufactured by a Los Angeles-based company called Americhip, and each ad can handle about 40 minutes of video.

Here are some more details about the Americhip technology: the screen, which is 2.7 millimeters thick, has a 320x240 resolution. The battery lasts for about 65 to 70 minutes, and can be recharged, believe it or not, with a mini USB cord--there's a jack on the back of it. The screen, which uses thin film transistor liquid crystal display (TFT LCD) technology, is enforced by protective polycarbonate. It's a product that has been in development at Americhip for about two years, spokesman Tim Clegg told CNET News via e-mail.

"It's leadership in innovation, which we really stress at CBS in every part of our company," Schweitzer said of the ads, which were developed with the collaboration of the Ignition Factory, a division of the Omnicom Group's OMD media agency.

PepsiCo has been experimenting with edgy, experimental ads for some time now, distributing millions of 3D glasses for its SoBe LifeWater Super Bowl ad earlier this year. It more recently launched a new Mountain Dew flavor by inviting prominent Twitter users to a party at a trendy Brooklyn venue.

Pepsi Max is the company's new diet soda geared toward men, advertised earlier this summer with bold print ads that declared, "Save the calories for bacon."

"The evolution of marketing television in the fall--it used to be as simple as this," Schweitzer said, holding up a vintage copy of TV Guide. "It was axiomatic in those days. If you took an ad in TV Guide, people watched your program. Not anymore."

Disclosure: CNET News is published by CBS Interactive, a unit of CBS.

This post was updated at 1:38 p.m. PT with more details about Americhip's technology.

This is sort of interesting. MTV Networks, which certainly has a lot of video content out there on the Web, on Wednesday released the results of an internal study to determine what kinds of advertisements are most effective and online-friendly matches for short-form online videos.

The conclusion? "Project Inform," the MTV survey, found that a five-second-long "pre-roll" ad in advance of the clip, combined with ten seconds of a semi-transparent ad unit that takes up the lower third of the video (and starts about ten seconds in), makes up "both the most effective and the most audience-friendly ad product for short-form online video," according to a release.

MTVN calls this the "lower one-third product suite." It was tested against two other ad packages, the "sideloader," which combines the five-second pre-roll with an ad that rolls out of the side of the video window; and a traditional 30-second pre-roll before the ad.

So, obviously, that's a limited number of options and certainly doesn't reflect the full range of possibilities for online ads. But it was thorough: Project Inform ran consumer survey tests across about 50 million video streams on the Web properties for media brands like MTV, Comedy Central, and Nickelodeon.

"Short-form online video consumption is exploding, but there's still a lot of confusion among marketers over which ad formats deliver for brands without compromising the user experience," Nada Stirratt, executive vice president of digital advertising at the Viacom-owned MTV Networks, said in the release. "By exploring the viability of new ad products around short-form online video, Project Inform provides the type of insights crucial to creating the innovative, custom solutions that this marketplace needs."

The catch is whether even the highest-performing varieties of online video ads still really rake in the dollars. Online video has been notoriously difficult for companies to monetize, but that's in part because the first variety of video to gain traction on the Web was amateur, user-created content (do top-notch advertisers really want their message next to a video of a squirrel on water skis?) and also because traditional, TV-style ads don't have the same impact alongside shorter Web clips.

There have been some promising signs, though. Video portal Hulu has investigated a couple of experimental video ad formats since launching last year, and has had good news to report on the advertising front--like that its inventory sold out a month after its public debut.

Viacom isn't a member of the Hulu joint venture, which now consists of NBC Universal, Disney's ABC Entertainment, and News Corp. But a limited number of episodes from Comedy Central talk shows "The Daily Show with Jon Stewart" and "The Colbert Report" started playing on Hulu last year.

YouTube said Monday users can choose whether to watch an advertisement at the beginning of a video or to watch a few ads as their video plays.

The Web's largest video site will give users a chance to choose when to watch their ads as part of a test. Those who choose to watch an ad at the outset, what YouTube calls the "promoted video," will get to choose between ads.

Hand it to Google, the company continues to try to find the kind of Web video ads that please advertisers but don't alienate viewers. It's tricky. The process can sometimes be painful for both company and users. For instance, some of the ads that have appeared lately at the bottom of YouTube videos obscure much of the lower half of the frame.

What's the use of clicking on the video if I can't see it? YouTube's got to pay the bills somehow, but I'm glad they're looking for less annoying ways to advertise to viewers.

"We are constantly testing a wide range of options to find the right advertising format for the right content on YouTube," the company said on its blog. "We think giving users a say in the process helps our efforts."

(Credit: YouTube)

SAN FRANCISCO--If the $1 billion Web video advertising market is to reach the level of television's estimated $50 billion, it ironically won't be thanks to YouTube, the Internet's most popular spot for watching clips.

That's at least the read from Internet video executives here Thursday at the RBC Capital conference. Executives from popular video search and ad companies said that so-called user-generated videos like those on YouTube aren't drawing any significant dollars from advertisers or agencies. Advertisers need to control their brand, and it's seen as too risky to give up that control on a network with home videos or potentially pirated broadcasts.

One executive went so far as to say that user-generated videos will never make money.

"It will be like instant messaging. It's ubiquitous but no one makes money on it," said Thomas Wilde, CEO of Everyzing, which hosts digital audio and video for major broadcasters such as Fox Sports and Cox Radio.

Of course, he has a stake in supporting professional content. But that's still a controversial idea, given that Google spent $1.6 billion to buy YouTube two years ago. Despite the site's enormous popularity--it's the no. 5 Web site--YouTube has yet to make money from the massive video inventory it produces. Industry insiders have even estimated that it costs Google as much as $1 million a day in bandwidth fees to serve hundreds of millions of videos, according to Fortune.

Suranga Chandratillake, CEO and founder of video search service Blinkx, speculated that Google didn't really care about the costs when it bought YouTube. The acquisition, he said, was likely about acquiring those millions of people who visit YouTube every day--the same rationale behind Microsoft's interest in Facebook. (That said, YouTube has sought to form partnerships for professional videos.)

He disagreed with Wolfe that user-generated content will never make money.

"It will have to be a very different kind of advertising. If someone does figure it out, then Google will be in a good position," he said.

So when and for whom will the money start rolling in? Video ad executives said that while YouTube has a lot of inventory that's hard to monetize, sites with professional content such as Hulu.com don't have enough inventory to serve demand from brand advertisers.

Jayant Kadambi, CEO of video ad network YUME, said that in February, a major auto manufacturer called him and asked to spend $2 million on online video broadcasts the day before the Super Bowl. "I couldn't take it," Kadambi said, clarifying that he didn't have enough inventory. (His company now runs a piece of Microsoft's video ad platform.)

He said only recently has there been enough video to start targeting ads to people's demographics, location and age. That has kept the cost of video ads relatively high--between $10 cost per thousand impressions and $20 cost per thousand.

Video executives also said that they're getting higher rates of response on video ads than typical online display ads, which can command as low as 0.1 percent click through rates. They said that the more popular pre-roll video ads--or ads that play before a broadcast--are getting anywhere from 2 percent to 6 percent response rates.

Still, Blinkx's Chandratillake said hosting and streaming video is expensive, particularly compared with a text page. "If you are a publisher you're paying for this expense and you're trying to figure out how ad revenue will offset that expense," he said.

"What we've found is that advertisers and agencies are only interested in professional media, so professional content providers are having a good time finding extremely high demand because they have a lack of video views," he said.

He said his company has had some success creating a program to place sponsored videos next to searched-for broadcasts.

As for getting to TV-like spending, advertising executives said that that likely won't happen soon, if ever.

"I don't think it's going to be a $50 billion business, but it's going to be a more efficient business, one that's targeted and relevant," said Brandon Berger, an executive at MDC Partners, a holding company for several digital advertising agencies.