“What we do is deliver a Google-like opportunity for manufacturers across retail sites,” Searchandise’s president and CEO, John Federman, told ADOTAS. “Manufacturers we work with have found that with our service, they go from being relegated to no better than the 15th position on retail sites to climbing up to the 3rd position.”

As we all know, a manufacturer’s position in an online shopping queue is essential: according to Jupiter Research, 72% of shoppers only click on products in the first page of search results.

Federman likens Searchandise’s service to retailers that pay for premium placement in brick and mortar stores.

“We give our clients an opportunity to do online what they’re already doing in the offline world,” he explained.

The result? Increases in click-through rates from 200% to 1000%, Federman said.

So far, Searchandise has “very purposefully” just focused on the consumer electronics sector. (Clients include Samsung, Sony, Dell and Cannon). But now that Searchandise has climbed that vertical, the company is ready to take ascend up the house-ware, appliances and apparel verticals, most likely starting in February of 2009.

Despite the gloomy economy, the company is growing quickly and adding sales staff, account managers and operational staff “aggressively,” Federman said.

Until July of this year, Searchandise was called Guidester, but when it re-branded, it also re-shifted its focus from navigational tools to search-based merchandising services. Federman was brought on board in December of 2007 to ease the transition, build a new staff and re-energize the company.

“Our overarching goal is to make our clients think about more than data profiling and algorithms a la Amazon,” Federman stated. “By simply re-ordering of search results they’re getting their product in front of the customer — we’ve just taken the best practices offline and put them online.”

Sounds like they’re off to a great start.

The report, which focused on Europe, found that Europeans have doubled the time they spend watching TV online in the past year – and online advertising is keeping up, AdAge reports.

About 20% of online display ad spend will be devoted to online video ads in Europe, the study found (accounting for $1.4 billion by 2012, up from $224 million last year).

Tremor Media reported that 20% of its 15-second pre-roll ads were ditched before they were done – but AdAge points out that many sites report that 10% of users ditch videos within 15 seconds, whether there’s a pre-roll ad or not.

“It makes sense that in-stream ads are more popular, because everyone has broadband now and we expect to see richer content on the Web,” Jeroen Matser, strategy director at Tribal DDB, London, told AdAge. “It’s also a return to allowing people to sit back again. People can relax and be entertained, which might be refreshing in this cluttered, call-to-action environment.”

Short-form video wonder YouTube doesn’t run pre-roll ads, claiming they lose as much as 50% of their audience with them.

What have you been up to since leaving Jupiter Research?

Well I continue to look at the issues affecting online advertising and how they impact the advertising ecosystem. Only now, I am also taking a closer look at viral and word-of-mouth marketing thanks to my work as the Director of Strategy at Ammo Marketing.

So what has changed in online advertising since you left Jupiter Research in 2005?

Since I left Jupiter Research in 2005, the online advertising industry has returned to a point where we are experiencing some of the “problems” we had in the late 90s. As has been well-documented, we have been experiencing a shortage of advertising inventory. We have all heard the stories — automotive sites being 85% sold out through the end of the year, home page inventory was a dream, ad good-luck reaching any of the sought-after demographics. Media buyers and planners, who just a few years previous were practically going door to door looking for companies that wanted to advertise online suddenly found themselves scrambling, looking for good placements.

And what about publishers?

From the publisher’s perspective, the situation wasn’t much better. Certainly, they enjoyed the flow of revenue and the ability to creep the cost-per-thousand (CPM) impressions back up toward late-nineties levels. But the fact is that no one wants to turn away customers, and advertising is a fickle business: revenue streams are never guaranteed and opportunities definitely need to be taken.

In my opinion, this resulted in a renewed interest in how the technologies of the Internet could help alleviate the challenge of placing ads. That is, there was a shift in the thinking about ad space, away from considering it to be a finite resource and toward innovations that would open up new spaces and new ways to advertise.

The perception of an advertising space shortage breathed life into many new concepts, including behavioral targeting, contextual advertising, ad-networks, and optimization systems. It also invited publishers and advertisers to consider new places for ads to appear, including on mobile devices, in games and in applications.

What about In-Text?

In-text advertising straddles both of those approaches. In-text advertising provides a new, elegant approach to targeting as well as placing ads in previously unused space. However, as with most new approaches and innovations, the solution requires a level of insight and consideration to the effect that it will have on all constituents: advertisers, publishers and consumers. Considering these issues, though, can generate an opportunity that provides both new revenue and advanced learning for publishers, as well as highly targeted media for advertisers.

In your opinion, what’s appealing about In-Text Advertising?

This ability, inherent in the technology of solution’s like Kontera’s, and in the concept of in-text advertising is what not only sets it apart, but points to its power and the reason why publishers will rapidly begin experimenting with and adopting in-text this year. In-text helps to crack open the Long Tail for both advertisers and publishers. The Long Tail is an economic principle that helps to explain the appeal of the Internet. The principle is complex, but the salient notion is that the systems and the scale of the Internet can allow for the profitable serving of all niches, no matter how small.

What are the challenges for publishers in implementing an In-Text Advertising solution?

The main challenge is that dynamic technologies of digital publishing and ad targeting require publishers to relinquish some control over to trusted systems able to make determinations about precise ad placements.

Publishers must become comfortable with the notion of introducing ads into the content itself. Internet placements have been moving closer to the content over the years, with large display ads appearing in the middle of articles, for example. In-text actually creates a fairly elegant solution to the problem of placing ads within text, by making the display of the ad entirely user-initiated. That is, the ads do not automatically appear on the screen on page-load, but rather only when the user rolls the mouse over specially tagged words. Research has consistently shown that consumers not only appreciate so-called “polite” ads more, but the initiation itself appears to help the consumer notice and ultimately remember the ad: they are the ones who are asking for the information, after all.

And for advertisers?

For advertisers, it’s less of an issue. If their campaigns are generating a good ROI, then that is an indication that the ad delivery solution is effective. But what about issues of branding? Good brand awareness doesn’t have the same ROI equation, but Kontera and other in-text providers create branding opportunities for advertisers as well via video, flash, etc.

What about User-Generated Content?

To monetize user-generated content, In-text is a good ad-delivery vehicle. Naturally, contextually-based systems are best suited to find the best and most relevant ads for this type of dynamic and unpredictable content. Comments in a forum, for example, can be wide ranging. Consider the example of an article on fitness trends. A forum attached to that article could spark comments about yoga and diet, but also may generate content about herbal remedies or even celebrity gossip (“did you see that so-and-so lost 80lbs on the Rice Diet?!”). Contextual systems are able to pull appropriate, targeted ads for this wide variety of content.

What are some of the other implementations for In-Text Advertising?

Publishers using in-text that offer a range of control can use the technology not only to serve ads, but also increase the so-called stickiness of their site. That is, in-text technology can be tuned, by the publisher, to generate a new breed of house-ads, which keep visitors on their site longer by merchandising related content within an actual story.

Consider a hypothetical story about fitness trends. If this story were running on a newspaper site, which would have stories about multiple subjects across several categories, an intelligent in-text system would be able to link individual elements within the story to other, relevant content. For example, the “yoga” link could be connected to a review of local yoga studies that was published in the past.

The result is not, of course, revenue generated through advertising. Rather the in-text advertising system is being leveraged, thanks to its ability to both scan through an article for category keywords, as well as provide additional content and links in a way that does not interfere with reading the article.

While it has long been a practice to place related links at the bottom of articles, in-text provides an additional level of functionality that improves the overall experience. The first is that articles that cover broad ground can have relevant links placed directly alongside key ideas. The fitness trend article would have a long list of links at the bottom, of seemingly unrelated content.

Any final words?

Search ads, today, have become an accepted part of the online experience. Some consumers even report that the ads appear to be more relevant than the natural results. In-Text is on a similar learning curve. Provided publishers understand how to use the technologies afforded by systems that can be managed and structured, the ads can be relevant, polite and effective.

Systems, as well, will develop along at least two lines. The first will be in display technology. Consumers will begin to find richer content in the in-text experience, with animation, video and interactivity replacing the standard text-only ads predominantly seen. The other axis of development will be in the realm of relevancy and control. No one benefits from poorly-placed advertising, and in-text systems are developing both their back-end systems to be better at finding keywords in content and choosing the correct ad to attach to those words.

More so, these systems will continue to push this control back to the publisher, allowing them the flexibility they need to tune these systems so that they are not only good, but good for their particular sites and their particular needs.

And what about the future of online advertising?

I think it’s uncontested that the world of advertising and marketing is evolving and that the consumer now has more control. The advertisers that succeed in engaging and interacting with customers will win, which is why so many companies are working on viral and word-of-mouth marketing initiatives.

But this does not mean the end of the ad publishing network. Networks that succeed in interacting with users by providing either contextually or behaviorally relevant information will also win when the advertising messaging is both relevant and engaging.