Fill-In-The-Blank Online Video Advertising

So long, blue skies? A California start-up has rolled out a software-as-a-service platform that inserts ads smack-dab into the actionless portion of a Web video.Mountain View, Calif.-based Keystream's SmartAd platform automatically detects where in a video the subject matter is located, and then it "unobtrusively" places 10-second video ad overlays in the blank portions of Web video content, including live video streams. When a person clicks on the ad -- whose placement is based on demographic, geographic, and contextual factors -- the video pauses. "Blank spaces are found on average once every two minutes, providing an ad insertion opportunity that increases video ad monetization," Keystream explained in a press release announcing the service (PDF).

In testing SmartAd prior to today's debut, Keystream says click-through rates have been high -- 5% to 6%, CEO Schuyler Cullen told GigaOm. Keystream charges for each ad impression it delivers and is considering tiering the service based on actions taken, such as rolling over the ad or clicking through it, he added.

IDC research analyst Caroline Dangson thinks Keystream's idea is preferable to advertising prerolls that run before a video begins, citing an IDC study that found prerolls ranked as the third least-favorite form of online advertising after pop-ups and page takeovers.

But not everyone thinks SmartAd sounds like a smart idea. Counters TechCrunch's Robin Wauters: "If a video stream includes a scene featuring a big blue sky, a white wall or a grass field in the background, the maker probably put it in there for a reason. Who in their right mind would want to see ads placed right on top of those, even if thats not where the 'action' is taking place?"

I don't exactly disagree.

How about you? Is this the type of advertising you'd be willing to spend some of your budget on? Or do you think it sounds like a huge turn-off?