Through a variety of sources we’ve confirmed that Technorati is making plans for a major shift in its going forward strategy, and is also considering a number of corporate development transactions.

First, they’ve been pitching venture capitalists on another round of financing. That’s not surprising – their last round, $10.5 million, was in June 2006. The company has raised a total of just over $20 million, and given that they have 25 employees, it’s time for another round. But we’ve also heard that they’ve hired Montgomery & Co. to shop the company to buyers, simultaneous to their funding pitches.

What’s more interesting, though is what we’re hearing on the product front. Technorati, under new CEO Richard Jalichandra, recently changed it site to focus more on its core blogging audience.

That change foreshadows the upcoming shift – which places the Technorati site itself as an anchor in a new blog advertising network.

Advertising networks are popular right now – Glam recently raised $85 million after transitioning, seemingly overnight, from a small web property focused on women to selling advertising for a variety of similarly-focused publishers. And John Battelle’s FM Publishing, an advertising network focused on technology blogs, recently hired investment bank Savvian to help them raise money or sell after turning down a $100 million buyout offer.

Technorati will certainly be competing head to head with FM, although sources say they’ll focus on the long tail of the market as well (FM only takes larger sites). The network will be a self-serve exchange for bloggers (and other publishers) as well as advertisers. Ad units will include both display and text ads, and will allow units to be charged on both a CPM and CPC basis. This self-service model looks a lot more like Adbrite than Glam or FM.

Technorati tags, which are very often used to describe blog posts with keywords selected by the author, would also be a natural way for Technorati to target advertising more effectively.

Technorati has also considered other strategies recently, including a blog rollup. But our understanding is that they’ve gone with the ad network idea, and are currently focusing engineers on finalizing the product.

Will the strategy work? As we’ve argued many times, ad networks suffer from fickle customers. Glam offers partners revenue guarantees based on page views (and lost $3.7 million last year on $21 million in revenue). FM has resisted guarantees to date, but lost high profile partner Digg last year to Microsoft. Others, including us, have simply sold advertising directly while continuing to work with FM. With Technorati entering the market, publishers will have yet more choices. That’s good for everyone except the ad networks competing for their business.

Spottt, which went into private beta at TechCrunch40, launches to the public today. The product is part of the Adbrite advertising network, but is being run as a separate brand.

It is a reincarnation of sorts of LinkExchange, an advertising network that launched in the mid nineties and was later acquired by Microsoft in 1998 for $265 million. LinkExchange co-founder Tony Hsieh (also the CEO of Zappos) is advising Adbrite on Spottt.

The basic idea is that you place the Spottt 125×125 ad unit on your site, above the fold (no adult content). They provide a simple embed code, or you can use your own ad serving software (we use OpenAds). For every two ad impressions that you serve, you’ll get one free ad somewhere on the network (you can see the ad unit here on TechCrunch, we’ve added it into the sponsor’s area to the right to test it), and it is also on CrunchBase.

That leaves Spottt with 50% of the ad inventory for itself. For the first year they’ll just place their own ads on sites. After a year they’ll add the extra inventory to Adbrite and let advertisers purchase it.

This isn’t for everyone, of course. Sites that can sell ads will want to do so to make the money. But Adbrite founder Philip Kaplan notes that there are millions of websites that cannot afford to advertise, and this gives them a way of doing so without paying. And even sites that have advertising units on their site may want to add this to get some inventory on other sites. “I think this is the coolest thing we’ve ever built,” he said.

Spottt is also providing real time statistics for users, including the number of ads you’ve shown, the number you’ve received (half of that) and the number of clicks on both ads you are showing and those you are receiving. Click on the image for a larger view of sample stats.

Spottt is run from Amazon’s EC2 web service, and advertising images are hosted on Akamai (Kaplan says he wants to be able to scale quickly in the event it grows anything like LinkExchange did back in the day). They are also working with Gigya to enable the placement of the ad unit on MySpace and other social networks. If ads aren’t accepted on any particular social network, he says, they’ll just run their house ads on that site.

If you’d like to sign up for the service, use the code “techcrunch” and get 1,000 free impressions to start. The first 1,000 registrations qualify.

AdBrite might have just secured an additional $23 million in funding, but at midnight tonight its business prospects may look decidedly dimmer. Competing ad network Etology is cutting deals with some of AdBrite’s biggest customers to take over their ads.

A big chunk of the ads that AdBrite serves are for porn sites on behalf of the AVN Media Network. These AVN Ads make up 31 percent of AdBrite’s total daily impressions (259 million out of 824 million total, according to the respective Websites). Yes, porn is the lifeblood of many of these online ad networks—don’t act so surprised.

Since December, 2004 AdBrite has been supplying the technology, billing, and payment platform for AVN Ads. Now that deal is going to Etology, who will manage the site from now on and relaunch it with a new look. Before that happens, AdBrite is trying to redirect all of its members to its own new adult advertising sub-brand, BlackLabelAds. If you go to the AVN Ads Website, you will see a big pop-up trying to switch advertisers and publishers with existing accounts over to BlackLabelAds. Yet, according to Etology, it has already secured the loyalty of 1,268 (and counting) of the biggest porn sites on AVN Ads, including YouPorn, PornTube, and RedTube. (Out of 6,614 total). Those 1,268 sites account for 108 million daily impressions (or 42 percent of AVN Ads’ total, and 13 percent of AdBrite’s total). The other 151 million impressions are still up for grabs. Etology is trying to lure them with a 75 percent share of revenues, versus the 70 percent they got from AdBrite.

I caught up with AdBrite co-founder Philip Kaplan on the phone to get his take. He notes that all the current 6,614 sites that run AVN Ads have AdBrite code on them, and that is going to stay there unless they take it off. “If you were an AVN Ads user before, you are automatically a BlackLabelAds user.” But he is really not too worried about losing the porn business because it is not where he sees the future:

Adult is an interesting thing. It is a lot of pageviews, it is not a lot of revenues. Most of the major players support it, but as the Internet advertising business is growing and more mainstream advertising is coming from TV and print, it is becoming less and less significant.

In the meantime, he is happy to fight it out with Etology for the porn advertising business, but it is not where he is planning on spending the bulk of the new money he just raised.

Here is what the new AVN Ads Website will look like:

Ad networks are still catching money like rain. AdBrite raised $23 million from existing investors Sequoia Capital and Hedge fund Artis Management, reports Dan Primack. This is on top of $12 million, the company has already raised. In October, comScore ranked AdBrite as the 26th largest ad network after MySpace. Its ads reached 71 million people that month, representing a 39 percent reach of U.S. Internet traffic.

AdBrite, which was founded by Philip “Pud” Kaplan of FuckedCompany.com fame, targets ads based on demographics. It also offers an embeddable video player that incorporates ads as clickable watermarks.

Session six as follows, including our live notes.

Spottt (Adbrite)

Spottt helps like-minded sites promote each other for free. Just put a Spottt on your site, blog, or MySpace profile. Every time you show someone else’s ad, they’ll show yours. Spottt was created by AdBrite, with the assistance of Tony Hsieh, co-founder of LinkExchange.

Simple model, 1:1 exchange model. Same as original link exchange program bought by Microsoft.

More useful than original program. Original co-founder of LinkExchange.com on board

Clickable

Clickable provides a service for creating and managing online advertising. Their technology provides campaign management tools and an intuitive interface to view and manage performance and direct spending across all major ad networks. In addition, advertisers are empowered to self-manage their ad buying to yield transformational results.

TC40 anouncements: Ex AOL CEO has join board, adding Adbrite on site, and released in beta.

advertising aggregation tool, slick interface. Manage campaigns on Yahoo, Adwords.

GotStatus

GotStatus is a community-driven systems management and monitoring tool that is aiming to become “Google Analytics for servers.” Users are able to place a snippet of javascript and start managing and monitoring the server side of their web applications in the same way Google Analytics does for their browser side. They will be able to track metrics on items like new accounts per day, database size, and Amazon S3 usage.

Intro is a comparison to Google Analytics, but states that Google only solves half the problem, no coverage of the server.

Another nice interface, provides server stats including email.

Multi-user platfrom, supports customers/ clients. Can customize results with dashboards, widgets.

“User Generated Monitoring”

PubMatic

PubMatic is a meta ad server that sits between online publishers and online ad networks like Google AdSense, Yahoo Publisher Network and Value Click. Their service helps small- and medium-sized publishers manage and maximize their advertising inventory by seamlessly communicating with multiple ad networks to help them find the optimal ad layout and the highest paying ad network. They also provide them with a central dashboard to track all their ad networks and ad configurations.

Pitch: we’re the first company presenting at TC40 that offers revenue opportunities for publishers.

Pubmatic works as the middle man.

Offers optimization tools as well, color choices, sizes.

In alpha testing until today, now in open beta

Sites using the service have seen 70-110% increase in revenue.

Data is pulled from other ad networks.

Also offers dashboard widgets.

Nice idea, I’ll be keen to try it.

ZocDoc

ZocDoc is an online service that lets consumers find, search and book dentist and doctor appointments. Their service is integrated into dentists’ and doctors’ appointment systems so that last minute cancellations can be filled by other patients. ZocDoc also provides consumers with information on specific dentists’ and doctors’ office including what insurance they take.

Intro: there is a problem with easily finding doctors.

Online way to find and book medical practitioners. Site has just gone live now.

Nifty feature: site shows available time slots.

Play acting on stage, guy trips over, role playing using ZocDoc, something different.

Doctor listing include bio details + user ratings…I can feel a law suit coming on in the next 12-18months…but nice to get reviews of doctors from the user view point.

Experts panel and spotty Wifi. grrrr.

Guy likes Spottt…because it’s the only model he understands.

Esther Dyson likes Clickable, heart is with ZocDoc

Some good discussion around ZocDoc and lawyers, no live blogging as Wifi was down.

Experts seems to like ZocDoc, Clickable, Pubmatic. A strong session, I’d think Pubmatic just as the best product but only because I’ve got a publisher bias.

When I wrote a post earlier today suggesting that YouTube was not the first to use a Flash overlay advertisement for online video, I didn’t realize I’d be getting so many emails and comments disputing exactly who first invented the unit.

VideoEgg has certainly been doing this for a year or so. In a comment to that post, though, an (unconfirmed) ex-YouTuber says the idea was “discussed long ago inside the company” and follows up with:

All other video sharing websites that came out around the time YouTube emerged were still using Quicktime or Windows Media. YouTube might as well accuse VideoEgg of stealing the idea of using a Flash video player.

Next up was Adbrite founder Philip Kaplan, who emailed me to say that Adbrite has had their own overlay product for nearly a year. He also pointed out that I wrote about it. The ad unit is less sophisticated, but it is certainly a Flash video overlay ad unit.

And finally, Brightcove CEO Jeremy Allaire sent me a long email saying they’ve been doing this as far back as October 2005. He also says the ad units are not particularly popular with advertisers:

I caught your post on VideoEgg taking credit for video overlays as an ad format vis a vis the latest YouTube ad product introduction.

To reinforce this point, while I don’t want to claim “invention”, we were certainly very well ahead of the market when we introduced video overlay ads back in October of 2005, just as YouTube was getting their first pirated episodes of The Sopranos on their site. At the Web 2.0 conference that fall, Brightcove debuted our beta service and as part of that both demo’d and discussed how we wanted to changing video and television advertising with new formats that could engage the user in a non-intrusive manner while creating opt-in ‘takeover sponsorship’ units that a marketer would be excited about. We demo’d overlay ads from Coca Cola running in a MTV Networks channel that we were just launching with them. The New York Times covered this debut.

We subsequently demo’d and introduced these formats again at AdTech in New York that fall, and if you speak with any number of a major content owner brand partners, it has been part of our platform since then, along with a wide range of other innovations in video ad formats, policies and targetting mechanisms.

Interestingly, despite having been 18+ months “ahead of the market”, to our disappointment, there has been extremely limited uptake by the advertising community around these formats. There are a lot of factors behind this limited uptake, including:

- the advertising community buying video have been very focused on leveraging existing creative and buying patterns in the online video space
- most content publishers and media owners have been focused on getting the ‘basics’ up and running, and also responding to the RFPs from marketers and advertisers, which are almost 100% focused on basic short-form video commercials
- for premium brands and content, the basic pre-roll and companion banners are yielding extremely attractive CPMs and there is little evidence that :15 ads have any negative impact on end-user viewership behavior — in fact, our own metrics show that sites that run without any ads, and then introduce :15 pre-rolls and banners achieve identical usage and performance (e.g. no drop-off in users because of ads) on their content.

Nonetheless, we remain very bullish about ‘composite’ video advertising formats that combine overlays and unique and non-intrusive calls to action with deeper interactive marketing experiences. We’ve been pushing this for years and only now are starting to see the publishers and media owners that we work with begin to take an interest in these formats. I believe this is because we’re now entering a phase where content companies are looking at ways to maximize yield and revenue within their content, and they are introducing more mid and long-form content which require, by economic necessity, a different suite of formats to deliver a good user experience.

So where does that leave us? Maybe none of these startups did – Om says it all goes back to old school television. We’ll see if VideoEgg’s patent filing is unique enough to be issued. But they’ve already said they won’t be using it offensively to stop others from doing this. The market will sort it all out.

cartoon credit: the amazing Hugh MacLeod

It may seem weird, but I’ve been eagerly awaiting the day when I see ads in my viral video. eMarketer expects online video advertising to nearly double in 2008 to $1.3 billion, but no one’s really nailed a scalable ad platform for video. However, Google’s been quietly testing their own system and there are a bunch of other startups tackling it as well.

There are a couple key issues they’re all struggling with as they try and generate the greatest amount of ad revenue. There’s still some uncertainty about where to put the ads (pre/post/interstitial?). Even the type or length of the ad is up for debate. A recent study found longer ads were more effective at branding, while conventional wisdom has cast doubt on users sitting through the longer plugs.

After deciding on the format, determining the content of the video in order to generate relevant ads is yet another tough problem. It’s also a dire matter for big brands that don’t want to risk being associated with inflammatory content. Finally, these ad platforms will need publishers, advertisers and a marketplace to trade in.

Here’s a look at what people are doing in video advertising:

Definitely the team to watch, YouTube is treading carefully, experimenting with text ads running along the bottom of the video that users can click on for a full video ad. They’re going to be testing the system with some of their top content producers and word on the street is that the terms are pretty good. Revver splits ad revenue 50/50 with publishers. They run ads at the end of viral videos, which might mean that people are still paying close attention after watching the main content. However, this also means they lose some precious real estate to help drive traffic to other videos on their network like YouTube does. Revver filters the content themselves, tying in the appropriate ads. Similar to Revver, VideoEgg helps publishers deliver and monetize their video inventory. It’s a very hands on approach suitable for larger brands that have tight control over the quality and context of their content. They serve up over 20 million videos daily across their EggNetwork. Ads show up alongside lead ins to other videos as well. ScanScout’s technology scans each video and determines content, with ads delivered contextually to match each scene. They run text ads along the bottom of the videos based on context derived from audio analysis and user behavior.

They’re like adsense for video, tying contextual text ads based on the content of a video. It looks similar to what YouTube is aiming for. When videos play, Adap.tv digs up relevant Amazon products and Looksmart ads to populate an ad bar on the bottom of the video at key moments. They use tags and other meta data, as well as speech to text translations to find out what the video is about.

AdBrite was one of the first to overlay ads on videos with their InVideo platform. Adbrite has created an embeddable video player similar to YouTube. If we choose to show a video on TechCrunch, we can use this embeddable player, and at our option it will include Adbrite ads and our logo as a watermark. Anyone who takes the content and embeds it on their own site will show the same video, with the same ads and watermark. And all click backs on the video go to the original site.

The most interesting ad play, BroadRamp wants to make everything you see on your video a possible point of sale. See a t-shirt you like? Just click the video to buy it now. Tagging or programmatically generating the links to products from the video may not scale or prove too difficult. Their core business is still video content delivery systems, however.

Formerly Podzinger, Everzing searches audio and video. Since they don’t own the content they can’t insert ads on the video content, but their speech-to-text transcription means they can help solve the problem of finding out the subject of a video.

A video search engine like Everyzing, Blinkx analyzes videos speech and meta data to tease out the content of the video. They also claim to use visual recognition as well. However, Blinkx has also leveraged their technology to launch adHoc, contextual advertising based on the content of the video.

Another video search engine currently running in private beta, Cast.TV looks at a video’s meta data and surrounding links to determine more context around the video. We’ve been impressed with how well it works. They haven’t discussed plans to incorporate advertising, however.

Coming up with a kick ass, scalable ad platform solution for social video that satisfies the needs of publishers, advertisers, and viewers is only a piece of the problem. While finding the most effective format will take a lot of testing until consumers reveal the most effective methods, the platforms will also need video content to monetize. Since well defined video properties with targeted content can work with sponsors on established video ad networks, the ideal market for these platforms remains effectively monetizing the jumble of amateur viral video floating around on social networks and YouTube. However, YouTube, which currently owns the lion’s share of video on the net, seems to be taking their time developing the solution in house.

That leaves becoming a destination, partnerships, or acquisition as possible outs. Video search sites like Blinkx and Everyzing are currently monetizing their search pages, but can’t take full advantage of their platforms by embedding ads into the content they link to. While these sites offer deeper video search, existing as a destination site is also a tough path that goes up against established web properties like Google, Yahoo, and AOL. In a slightly different way of going it alone, AdBrite has been going directly to publishers with their InVideo player. Adap.tv has been testing out partnerships, trying their platform out on MetaCafe.

As with most ad platforms, advertisers and publishers will be trying them out for effectiveness. In the end, the startups that can deliver the most return to these two will win out.

The basic format for embedding images into a web page using the <img> tag has been around almost as long at HTML itself, since the first graphical web browser. It works, and it is used constantly. But can it be better?

Advertising network AdBrite, which is always looking for new ways to think about things, says it can. This morning, AdBrite launches BritePic to help people add a lot of new functionality around embedded images. Just by changing the embed code, web publishers can add a caption, watermark, zoom, share, resize and other features. And an advertisement, if they choose to.

The end product is shown above. Instead of embedding an image using a standard tag like:

<img src=”http://farm1.static.flickr.com/53/144942552_81a96c87cb_o.jpg/”>

BritePic simply uses a javascript code (non-javascript version is also available for myspace, blogger, etc.) and a very lightweight Flash 7 player to show the image with lots of additional features. BritePic has a code generator tool (see image at bottom of post), although all of the parameters are in the code itself, so power users can just quickly write it out. Here’s the code for the above image:

<script>
britepic_id = “297898″
britepic_src=”http://farm1.static.flickr.com/53/144942552_81a96c87cb_o.jpg”;
britepic_keywords=”Laguna, dog, pets, cute, perfect”;
britepic_show_ads=”1″;
britepic_caption=”Laguna: Attack Dog”;
britepic_width=”560″;
</script>

Any of the parameters can be changed above. When you register with BritePic you add a watermark and payment information if you choose to include advertisements in pictures. The id in the code above tells it what watermark to add. BritePic doesn’t host image files, so the src field tells it where to pull the image from. Keywords can be added (future functionality will show related pictures), adds shown or not, a caption added, and the width reset.

There are also a number of features in the pull up menu at the bottom left of the image above. Zoom is my favorite. Zoom in on a picture and see a larger version of that area. If you are using a large image and resizing, there will be less pixelation. But even for non-resized images the zoom feature could come in handy. On this blog, where we are limited in the horizontal space allowed for images, it will allow us to upload larger images and allow people to zoom in, or simply click to see the larger image on a new page.

The company has created a demo video, which we’ve embedded below.

AdBrite was founded by Philip Kaplan and Gidon Wise. Background information on the company is here.

Ad Network Adbrite, which we wrote about in November, has soft launched a new video product that is going to be very popular with bloggers and other sites that embed a lot of video.

The new product is called In Video. Adbrite has created an embeddable video player similar to YouTube, Photobucket, etc. (see video below using their player). If we choose to show a video on TechCrunch, we can use this embeddable player, and at our option it will include Adbrite ads and our logo as a watermark. Anyone who takes the content and embeds it on their own site will show the same video, with the same ads and watermark (revenue goes to the original video creator). And all click backs on the video go to the original site (whereas with YouTube all click backs go the original YouTube site).

Whether you want to embed ads or not, this is the best way I’ve seen to show video on your own site.

Adbrite is not hosting video, so you’ll have to upload it to YouTube, Photobucket, or wherever, in .flv format and then point Adbrite to the URL for the video.

In Video is in private beta testing – users can sign up for an invitation on the about page.

In 2002, page views on Philip Kaplan’s infamous FuckedCompany website were going through the roof – and he needed an advertising platform to monetize those visitors. He couldn’t find the self-service product that he needed, so he built his own with co-founder Gidon Wise.

That ad platform was eventually spun out of FC and turned into Adbrite. Today, it’’s the 11th largest ad network in the U.S. with 61.5 million unique visitors across represented sites, according to Comscore’s September report (advertising.com, with 146 million unique visitors, is the largest according to Comscore, although they do not rank Google Adsense).

Adbrite first started taking advertising for sites other than FC in 2003, and they raised $4 million in venture capital from Sequoia in September 2004 (Mark Kvamme joined the Adbrite board of directors). In February 2006, Adbrite raised another $8 million from Sequoia and Artis Capital, and Philip Kaplan replaced himself as CEO, bringing in Shopping.com veteran Iggy Fanlo to run the show.

Today Adbrite is one of the largest ad networks, with over 28,000 sites generating 750 million daily page views. 400 new publishers join the network each day. Adbrite keeps 30% of gross revenue generated, passing the remainder on to the publisher.

Adbrite 2.0

Until today, advertisers could only purchase simple text ads on the network, choosing specific sites to advertise on, or based on keywords appearing on pages within the network.

The new product, Adbrite 2.0, goes far beyond that. In addition to text ads, advertisers can purchase banner and other graphical ads as well as “interstitials” which take over an entire page when a visitor first comes to a website.

Advertisers can also target ads beyond keywords and specific publishers. Adbrite determines demographic data for visitors to network publishers via a cookie and reverse IP lookup. They grab U.S. census data based on the zip code of the visitor, which gives them data on ethnicity and income level. Adbrite also looks at Comscore data for each site that user visits, which gives them reasonalby good age and gender data. Once a user visits enough sites, Adbrite has a very good idea of the age, gender, ethnicity and income level of that particular user. Advertisers can then choose to target their ads to certain users. In the future, Adbrite says they will be able to track even more information on a user in the future – such as if they are a new parent, or looking for a car – based on the sites they visit.

All of this detailed user tracking allows Adbrite to charge more for ads, and pass that on to publishers, Philip Kaplan told me on a phone call earlier today.

There are new tools to help publishers, too. A key feature they have launched is the ability to allow publishers to stay with their current network, and change to Adbrite ads only if they’ll make more from those ads. So a publisher can show Google ads most of the time, and Adbrite will switch their own ads in only if they’ve sold inventory that pay over a publisher-set CPM level.