Advertising is key, of course.  Blinkx’s AdHoc program promises to place “unobtrusive, highly-relevant text advertisements against embedded video,” and the revenue that these ads generate will be shared.  In this respect, Blinkx appears to be acting in a rather surprising manner – although the videos’ creators won’t get anything, there will be a 50/50 split between publishers and Blinkx.

The timing of Blinkx’s announcement is also interesting – it falls just one day behind the release of AdSense’s new video units program.  At first glance, trailing the search giant doesn’t sound like the best way to attack it, yet Blinkx probably got more media and blog attention by launching at another time.

Furthermore, The Motley Fool’s Rick Aristotle Munarriz writes, “There’s also a real possibility that AdHoc ads may be better matches to the content than what Google coughs up.  Yes, Google spiders websites efficiently, but blinkx is the one with the video search advantage.”

Lastly, remember that, as Google’s market cap approaches $200 billion, successfully competing with the search giant in even the smallest way could be considered “great.”

A few players, including Google themselves, have started matching contextual text ads to videos, but this is the first I’ve heard of matching TV-style commercial ads contextually to the video in an automated way.

Naturally, this leads to a big question in my mind. Will the advertiser volume be there for blinkx to make this work? In order for contextual advertising to work you need enough advertisers to cover all the possible contexts that exist in this niche world of the web. It’s the main reason why it’s been nearly impossible for any ad companies to break into contextual advertising against Google and Yahoo!. Google and Yahoo! have the advertiser volume (primarily thanks to their search results to advertise on) that draws advertisers to their platforms by the thousands.

Are there going to be enough video commercials made by advertisers in all the different topics out there for blinkx’s system to actually have a decent coverage of contextually relevant ads? Even if Google or Yahoo! was launching this system today, I’d still wonder if their huge advertiser bases would be making video commercials to make this fly.

This idea will work, but is it too early to get the necessary advertiser coverage?

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AdHoc matches video ads with relevant videos appearing on blinkx using the company’s speech-to-text transcription and visual analysis technologies. The company says these technologies give blinkx a leg up on the competition for contextual video advertising.

Advertisers can customize timing and appearance of their ads, place them before, during, or after videos, or go the more traditional route with banner ads. The platform isn’t exclusive to blinkx; advertisers can use their own ad databases or third-party systems such as AdWords.

Suranga Chandratillake, founder and CEO of blinkx says his platform is different because it’s not built on preexisting text and image technologies and applied to video. “The AdHoc platform is revolutionary because it was built from the ground up to address rich media," he said.