From our early video test results, it’s apparent that video ad relevancy is far from tuned. Hulu may have more monetizable traffic than YouTube, but our analysis indicates the contextual search advertising opportunity around embedded videos is virtually untapped.

Our initial crawling results show that nearly 30% of blog pages contain an embedded video. Over 50% of these pages had ads so we checked to see if the ads were relevant to the video content.

Not so much.

We sampled the embedded videos, and the results were eye-opening and often hilarious. Low-carb diet ads paired with Chevy Chase skits. Anti-wrinkle cream spots next to Paintball safety videos. Kelly Moore paints next to a Miley Cyrus dance-off.

The revenue per video must be abysmal on these examples. Multiply this opportunity by the tens of thousands like these that proliferate across the Web daily.

Perhaps this opportunity will finally bring AdSense and publishers closer together? In exchange for a share of all advertising revenue generated from their content, publishers can provide AdSense and others with an API containing the location of their embedded videos and associated meta data to increase the relevancy of ads. Increase the relevancy, increase the revenue. Expand the pie for everyone.

YouTube’s 73% market share gives them plenty of room to experiment. And it’s not difficult to determine why Google has stripped the ability to watch videos directly in search results. To paraphrase a famous politician, “It’s the revenue, stupid.”

At YouTube’s scale, increasing your eCPM by a few pennies adds up, particularly when there is pressure to hit your quarterly numbers. When I was at Yahoo!, employees judged how the quarter was going by how soon paid advertisements replaced previously “internal-only” spots on the front page. You were foolish to plan a launch or critical initiative the last month of a quarter that relied on front page placements because the inventory just went away.

The question is – whose video is You Tube monetizing and, if it’s yours—or one derived from your video, are you sure that you are getting your fair share ?

Every month, a group suggests a new thesis to enable online content proliferation and strike a balance between the needs of consumers and publishers alike. Predictably, the output is a set of guidelines or call for new guidelines, as the Center for Social Media reported today. Though well-intentioned, more guidelines are not the answer; instead, participatory media will thrive through a community that is empowered by full visibility of online video re-use and publisher web distribution policies.

Determining ‘Fair Use’ is a tough, complex problem – an issue that has caused many media companies and individuals to shy away from embracing the Internet as a distribution channel. “Recut, Reframe and Recycle” the report from the Center of Social Media out of American University examines user-generated video content and classifies usage into nine common practices that appear to be ‘Fair Use’.

Media companies and artists like Lane Hartwell have long since thrown up their hands in trying to determine which instances of re-use to allow among the thousands of copies that appear on the Internet each week. The barriers are substantial:

• The tools to locate re-use of images or video content are limited.
• Reviewing each and every copy found is burdensome.
• Contacting each site to pursue a licensing deal isn’t feasible especially without some type of filter to identify which ones can result in a new revenue source.

Visibility is the answer, and, by this, I don’t just mean a long list of the sites re-using videos across the Internet, sorted by monthly visitor traffic. This won’t help with the nine common classes of ‘Fair Use’ introduced today and will bury most publishers under an avalanche of work.

Publishers of all sizes, and specifically video producers should be able to classify each video as “Promotional” or “Premium” assigning each a set of parameters that specify the maximum duration it can be shown, the branding and link requirements plus any ad-sharing splits.

With contextual, web-wide visibility of re-use, publishers of all sizes can post their distribution policies for the community to embrace. Any mashup less than 30 seconds can be greenlighted as long as a link is provided or full copying of premium videos can be enabled as long as 40% of all ad revenue is directed to the publisher’s AdSense account.

The complexities and possibilities of what can be created are endless, but all seem like a giant step forward.