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Time Warner to be investment partner in online video firm

Time Warner Inc. has made a strategic investment in the online video advertising firm ScanScout, an emerging video advertising firm that launched this past April.

The partnership with Time Warner gives ScanScout, who serves on-demand ads alongside Web video content, financial backing and exposure to the Time Warner brand.

“Having the world’s largest media company say that we like your product and your management team is a huge compliment,” said Doug McFarland, CEO of ScanScout. “Small companies need two things, capital and ready access to key decision makers and this partnership gives us this.”

ScanScout functions similar to AdSense for video. The platform uses technology to identify content through tag lines, video content and words spoken in the audio tracks of clips, and then serves up relevant ads in an overlay corner of the video screen or alongside the video. When an ad is clicked on, the video automatically pauses and serves the viewer an ad, as a video ad or a direct link to a Web site. The business model is a revenue-share, performance-based platform with a flat cost-per-click fee. The platform can be used in conjunction with other online video ads, such as pre- and post-roll content.

In addition to the Time Warner partnership, ScanScout has also recently added members to its board of directors. Jim Rossman, COO of Digitas, and Paul Vidich, formerly of AOL and Warner Music Group, joined as independent members, and Rachel Lam, VP of Time Warner Investments has joined as a board observer.

Existing board members include McFarland, ScanScout co-founder and president Waikit Lau, ScanScout co-founder/CTO Steven Lee, Chris Fralic, partner at FirstRound Capital, and David Orfao and Neil Sequeira, partners of General Catalyst.

Ad agency Ignited Minds worked with ScanScout to promote the Universal Pictures film, “The Bourne Ultimatum,” across various undisclosed publisher sites. Visitors to the publisher’s site could click on a video ad for the film and see the trailer and click back to the film’s Web site at www.thebourneultimatum.com.

Other partners of note include interactive agency Deep Focus, whose clients include HBO, Dewar’s, Google and Nike. User-generated publisher site Blip.tv is one of the disclosed publishers on board.

“We are working with about 15 to 17 major publishers and a few dozen large brand advertiser campaigns, with a lot more in the pipeline” McFarland added.

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