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September 1, 2008 Globes

 

By Noa Parag

The Internet video advertising market is expected to be worth $4.3 billion in 2011, which means that there is tremendous potential for companies developing technologies for this field. The models most widely used today are pre-roll and post-roll advertising - meaning short ads that appear before or after the clip being viewed, and the insertion of batches of advertisements in the middle of a video clip, in a similar fashion to television advertising.

Many players are trying to find innovative models for video advertising, in an attempt to crack the key problem: how to make money from the popularity of online video. Innovid Media Ltd., which was founded in 2007 by Zvika Netter and Tal Chalozin, is aiming to become no less than the leader in video advertising and make a profit from the projected meteoric growth in it.

Netter is CEO, and in 2005 he sold NTR, one of four companies he has founded, to Ness Technologies (Nasdaq: NSTC). Chalozin is CTO and a graduate of Mamram (the IDF central computing unit). So far, Innovid has raised $125,000 in start-up capital from a number of private investors including Jeff Pulver, and last March it raised $3 million in venture financing from Genesis Partners.

Innovid is developing a technology that enables three-dimensional advertisements to be inserted into online video content, by integrating virtual brands into the content itself. "We enable the embedding of flash files within video that can respond to camera movements and allow the surfer to create an interactive experience with the video," Netter explains. "Our technology allows such content to be injected into a film after it has been produced, creating a better fit between the brand being advertised and the content itself, without disturbing the surfer."

Innovid`s system can define advertising space and the type of brands that appear in a clip. One can insert, for example, the can of a certain brand of soft drink so that it appears on the table in a video clip, or a magazine in a picture mounted on the wall. The surfer can click on the brand to see more details or to buy it. "The world has become more sophisticated, and the video advertising industry also has to become more sophisticated, so that it can blend in with content and cause as little disruption as possible to surfers," says Netter. "A surfer from China can see the drinks can of a Chinese producer, while a surfer from Israel will see an Israeli brand, and a male surfer will see a different brand from the one a female surfer will see."

Many companies now operate in this field, among them VideoEgg Inc., and Israeli start-up PLYmedia Inc.. "Our business model already exists in the advertising industry, and it is based on payment on the basis of results such as exposures or clicks," says Netter. Innovid also offers users of its technology activity reports that show the results generated by integrating its technology in their advertising campaigns.

Globes: When you will become profitable?
Netter:"I don`t want to make any commitments. All those who have seen the technology have been really excited, but persuading content producers isn`t always easy. It always takes time for the industry to absorb new technologies, and this is something that characterizes all the innovative companies in this sector."

Innovid recently signed a contract with a leading content provider, whose name Netter and Chalozin are unwilling to disclose, with the aim of integrating its technology in a series of music clips that a large company has already agreed to sponsor. This pilot, which is also designed to demonstrate the model`s feasibility, will generate Innovid`s first revenue.