updated 4/2/2007 8:07:59 AM ET 2007-04-02T12:07:59

In what analysts think might be a first in the highly experimental advertising market, YuMe Networks Inc. is powering an ad campaign that allows the customization of video ads for some television shows that are downloaded from a Web site.

The messages or graphics in the video ads, for instance, can be changed to target different geographic regions.

Video ads already accompany television shows or clips that are streamed over the Internet, but the Redwood City-based Web ad startup is taking it a step further by allowing marketers to insert commercials into downloadable content.

YuMe’s technology allows marketers to attach ads at the beginning, middle, or end of downloaded videos, or as an overlay during the video itself.

“We can make the download model just like the streaming model, so you’ll never see an old ad again,” said Jayant Kadambi, YuMe’s chief executive and co-founder.

YuMe’s technology also allows marketers to keep track of how long viewers are actually staying with the commercial before skipping past it.

While YuMe might be the first to offer such video ads for downloadable content, it won’t be the last, said Tim Hanlon, a senior vice president at marketing consultancy Denuo, a Publicis Group company. “YuMe is a good harbinger of where advertising is going,” he said.

The company is among a growing number of startups trying to offer various approaches in video advertising to capitalize on the growing traffic in video distributed over the Internet.

“In Internet marketing, video is the baby in the family,” said David Hallerman, a senior analyst at research firm eMarketer. “And everyone is trying different ways of bringing it up.”

As advertisers follow viewers’ eyeballs onto the Internet, eMarketer predicts spending on online video ads in the U.S. will soar from $410 million in 2006 to $2.9 billion by 2010.

YuMe’s offering to attach ads to downloadable content was perfect timing for BitTorrent Inc., which runs the Web site where the videos can be downloaded, said Eric Patterson, the company’s vice president of consumer services. BitTorrent was best known for its technology that was often used to trade pirated Hollywood movies but it began working with content partners earlier this year to distribute legitimate films and television shows.

BitTorrent sells most of its television programs for $1.99 per episode. But starting Monday with the help of YuMe’s ad network, BitTorrent will begin introducing downloadable TV shows that are free — but contain ads.

BitTorrent will start with nine video game-related shows with 15-second ads from game publisher Eidos Interactive Ltd., but the entertainment network aims to make all of its television programming free and ad-supported by the end of the year, Patterson said.

“It’s all about testing what type of ads will work. I don’t think anybody knows at this point,” Patterson said. “But you’re not going to see eight minutes of ads for 20 minutes of TV. There’s no tolerance for that from consumers.”

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