in the flesh: practical use and hard revenue numbers

For all intents and purposes, Overlay.TV is iMovie for profit-minded bloggers and webcasters. After signing up, a bookmarklet lets users "grab" any video from many websites, including MySpace and YouTube, and put it into a timeline editor without ever leaving the host site; it's possible then to scrub through the video and drop in clickable overlay points that last as long as the user wants, whether it's three seconds or three minutes. In fact, just about everything is editable. The overlay can be as inconspicuous as a small translucent circle or as blunt as large product images or animated icons (axes, hearts, and robot heads were the examples here). Titles are also an option. For larger affiliates, much of the content for an ad can even be pulled automatically from the product page. Since Amazon's layouts are almost always the same, for example, images and text can stem from the online shop's own work rather than being filled out by hand.

In our demo, it was also evident that setting up ad links would be relatively easy, if not pain-free. That same bookmarklet can also be used to create a new "product" -- essentially, a link for a specific item -- from most sites that participate in the program. In many cases, it's possible to simply search for a relevant product and find a whole set of ready-made affiliate links to use. If the actual product is more obscure, it's often possible to pull content just by visiting certain product websites and triggering the bookmarklet.



If there's anything challenging to using Overlay.TV, it's the nature of a user-chosen ad system: since users can't just rely on an automated system or a dedicated ad network to supply ads, each video needs those extra minutes of time before it can be ready for the website. Understandably, the bookmarklet also can't be used to create new affiliate links directly from the iTunes Store; a search is usually the only practical option. One can also argue that the ability to auto-detect information from Amazon and other major affiliates might suit less-than-enthusiastic video editors, who might overlook links to smaller shops in favor of the easiest solution.

However, the Overlay system goes to great lengths to avoid that level of bias through its secret weapon: a side-by-side comparison of payout plans. While the service's beta stage meant that payment plans weren't immediately visible (all proceeds go to charity until Overlay is completed), both Cope and Lane noted that a product search will show the possible income from each search result, including what's required to generate a profit. If viewers are more likely to actually buy the product based on the video, such as when they're watching a review, it could make more sense to choose a small affiliate that provides more revenue for the actual sale than a larger affiliate which focuses on just site clicks.



The real question, of course, is whether clicks and sales translate to real money. According to Lane, the combined money given away to both a user and Overlay.TV from CPA (Cost Per Action, such as a sale) ranges between 5 and 12 percent depending on the affiliate and the product in question. As much as 50 percent of that revenue is taken by the user. That's certainly less than a direct ad deal, but is at least competitive with some affiliate plans: a similar, image- or text-only Amazon deal often nets between 3 and 7 percent, which is higher but not enough to necessarily outweigh the flexibility of the Overlay option.

Moreover, the true value of Overlay may not just be in whether it competes well with traditional online ads, or even that it offers video ad revenue in the first place. As I found out soon enough, the real advantage may be in where Overlay goes in the future, which could quite possibly include your cellphone or a networked media hub.

by Jon Fingas