Some of the nation's largest publishers are starting to sell ad space in what may be the final frontier of digital advertising: the trillions of images displayed across the Internet. If startups in Silicon Valley and elsewhere have their way, it will become commonplace to mouse over an image and find advertising, e-commerce or other information contained within.
"This category is very quickly coalescing into the immense opportunity and trend that we expected it would," said Bob Lisbonne, CEO of Pixazza, a 3-year-old company in Mountain View, Calif., that delivers ads and e-commerce to 3,000 digital publishers. It serves ads to 150 million unique visitors a month, a figure that has tripled since January.
But the startups acknowledge a significant risk: that they will alienate Web users, who will go to great lengths to avoid intrusive advertising.
"Three years from now, what users expect to be able to do with an image will have a lot to do with how responsible the companies who are in the industry today are," said Rey Flemings, CEO of San Francisco startup Stipple.
For all the difficulties of reaching consumers on the Web, online advertising keeps growing. U.S. companies spent $26 billion on digital ads in 2010, 15 percent more than they did in 2009, according to a study by PriceWaterhouseCoopers.
Pixazza ("pick-SAW-zuh") launched in 2008 with a big goal: to make every Web image interactive. "Now every picture is worth more than 1,000 words," its website asserts. The company has raised $17.8 million to date, more than any of its competitors. Its investors include Google's venture capital arm.
Lisbonne says that, eventually, hovering over an image will unlock all sorts of information, like flipping over a baseball card to find statistics. To date, Pixazza has focused on using images to enable shopping.
The challenge facing image-based advertising companies is choosing who will tag the Web's trillions of images and match them with advertisers. Pixazza's founders decided they couldn't do it using computer science alone.
"Algorithms even at their best don't tend to have judgment and taste and style," Lisbonne said.
Pixazza has contract employees identify products inside images on websites and match them with products from Pixazza's network of advertisers. Mouse over an image of a denim shirt-clad Sean Penn on MSNBC.com and a pop-up image will suggest a similar, less expensive shirt identified by Pixazza's contractors. Click the image and you can buy the shirt.
Shara Johnson, a 34-year-old contractor in Virginia Beach, Va., spends several hours each week matching fashion and celebrity photographs with more affordable merchandise.
"I'm always on the lookout to see what the new trend is," said Johnson. "... It's like you're a buyer and you're selecting clothing for that particular store."
Lisbonne says Pixazza is on pace to deliver 30 billion image views this year, a figure that has increased 50 percent in the past two months. Its ads now appear on "The Today Show" website and the gossip site Just Jared.
At Stipple, anyone who mouses over images will learn the precise products and can shop directly.
"If you Google 'red Ferrari,' you don't want Google to say, 'You can't afford it, so we'll show you red Hondas,' " Flemings said.
Various people can tag for Stipple: the person who took the photo, the stylists who created a celebrity's look, or brand agents who notice their products in a picture..
Stipple, which launched in September, has raised $2 million in venture capital.
While Pixazza and Stipple compete to build e-commerce into images, other companies are embedding a more familiar form of advertising into images. Santa Monica's GumGum puts Google AdSense-style keywords along with banners and Flash ads into images on sites from Gannett, Time-Warner, gossip site TMZ and others
In New York, Image Space Media is making a similar bid for users' attention.
Images make new connections possible, executives said. After a recent campaign for Gillette razors that featured Jennifer Lopez, Image Space worked to embed Gillette ads into images of Lopez on fashion and celebrity gossip sites, extending the campaign's reach.
"We've just begun to scratch the surface on how you can use this creatively," said Adrienne Skinner, Image Space's chief revenue officer.