Amir Ashkenazi is a captain in the emerging battlefield of online video advertising, and his weapon of choice is . . . text.

Ashkenazi's outfit, privately held Adap.tv, is among companies in the business of placing text ads into online videos. These firms match the text ads to the best videos, looking to get their piece of the online video ad business.

Online video is all the rage on the Internet, as are online video ads. But while most of the online video ad attention focuses on video ads, which typically run just before or after a video, text ads in conjunction with videos are another big component of this emerging market.

The text ads typically appear briefly within an online video. The small ad "hangs" there for a few seconds while the video continues playing. The viewer can click on the ad, which links to the advertiser's Web site. (In the meantime, the video pauses until the consumer returns.)

Just as text search ads have proved so successful — strategically placed next to search results of users motivated to click on the ad — so too can text ads be targeted within videos.

"We are using what works in Internet advertising and bringing it to video advertising," Ashkenazi said. "The amount of video content and traffic is growing. People are looking for a way to monetize that."

Other companies that have surfaced to fill this role include ScanScout, Blip.tv, Maven Networks and VideoEgg.

Text is seen as an alternative to TV-like "pre-roll" and "post-roll" video ads, short video ads that appear before and/or after a video.

Many consumers prefer seeing a small text ad for a few seconds than having to sit through a 15-second pre-roll video ad, says Emily Riley, an analyst for Jupiter Research.

"The text ads don't interrupt the user experience as much" as the video ad, Riley said.

Users no doubt will be seeing more ads, in any case. Online video ad spending in the U.S. is expected to reach $4.3 billion in 2011, up from $410 million last year and an expected $775 million this year, says eMarketer.

With video-related Web sites becoming a hit with consumers, advertisers will follow.

In June, YouTube — the No. 1 online video site — attracted 51.3 million unique visitors, up 162% from a year ago. No. 2 Google Video jumped 137% to 17.7 million. Google, (GOOG) the Web's No. 1 search service, owns both sites.

But advertisers can be wary of placing ads on video sites. YouTube and many of the other video sites feature amateur videos. Advertisers worry that their ads might be placed with inappropriate videos, says Rachel Happe, an analyst for research firm IDC.

Moreover, video ads differ from text ads. Video ads typically are about branding. They don't provide a quick link a user can click to buy something.

But text ads inserted within videos are expressly designed so users can give a quick click and immediately go to a site where they can buy something.

Video ads and text ads within videos "encourage completely different sets of advertisers," said Jupiter's Riley.

Adap.tv uses its own software to match and place text ads with the most relevant videos.

Metacafe, a video site that competes with YouTube and others, is as yet the only company to carry Adap.tv's ads on its videos.

For example, in a Metacafe video of flying model jet airplanes, text ads for Amazon.com (AMZN) and, later, Shopica, appeared. A click on the Amazon ad led to a page where users could buy the NASCAR 2007 video game, while Shopica led to new cars for sale.

"We take the most relevant ads and overlay those on the most relevant video," Ashkenazi said.

Adap.tv formed last year and just closed a $10 million first round of financing from Redpoint Ventures and Gemini Israel Funds.

So far, Adap.tv gets its ads through partnerships with LookSmart, (LOOK) a search engine, and Shopping.com, an online comparison-shopping service.

The company is using a pay-for-performance model. Advertisers pay only when a consumer clicks on an ad.

Adap.tv will share the revenue with Web sites that carry the ads.

Metacafe, meanwhile, carries a mix of ads, including preroll video ads, display ads, text-based search ads from Google and, of course, text ads for videos.

Pre-roll and post-roll video ads aren't abundant yet. Just as relatively few companies produce TV broadcast ads, so too do relatively few produce video ads for the Internet. Many advertisers prefer text ads to video ads because text is far cheaper to produce.

Adap.tv is helping to bridge the gap, says Metacafe founder Arik Czerniak. He says there's a lot more room for advertising within online videos and on online video sites.


BY PETE BARLAS