Conway: the next billion-dollar market online

Angel investor tells TechCrunch 50 audience product placement will be huge

Well-known angel investor Ron Conway has seen the new Internet pot of gold, and it will be driven by bottles of Vitamin Water and other products placed inside Web video content.

"There's a new multi-billion dollar market developing before our eyes, and it's product placement," Conway told the audience at the TechCrunch 50 conference.

One of the most prolific and successful angels in Silicon Valley, Conway was an early investor in Google, AskJeeves and PayPal.

While product placement deals have been ramping up during the last year or so, Conway's comment suggests it could be a major component of ad revenue in the early days of Web video.

The emergence of product placement to pay the bills for online content hearkens back to the early days of television, when advertisers were still figuring out the new medium.

Back then, entire shows were sometimes sponsored by one big retail advertiser. We're now seeing a repeat of that. 

Some of the first sites to attract big brand advertisers include MommyCast, which landed Procter & Gamble as the sponsor for its new video show. The team behind another parenting-related site, DadLabs, told us they were working parenting-related products into their shows.

Now, in the early days of Web video, when some ad buyers are leery of the quality of content, product placement is re-emerging.

He evangelized about the trend after watching actor and producer Ashton Kutcher pitch his new Web series as part of a pitch session featuring startups focused on youth and entertainment.

The four companies were Kutcher's Katalyst Films; Shryk, which is building Web-based financial sites aimed at teens and kids; Hangout Industries, aimed at 16-24-year-olds who want to create personal, 3D virtual worlds; and a social network for tweens called Tweegee.

After the pitches, as TechCrunch expert panel members Marissa Mayer of Google and Youtube's Chad Hurley sat nearby writing down their thoughts on the four presenting companies, Conway told me that brand advertisers will want to get in front of high-quality content.

"Product placement will be a big revenue driver," and will join search and display advertising as the next billion-dollar ad market on the Web.

Kutcher, whose past successes as a producer include the shows "Punk'd" and "Beauty and the Geek" is betting on product placement with BlahGirls, which debuted on the Web today and will feature several new episodes per week.

He told the audience that Katalyst will produce content that has "seamless brand integration." Vitamin Water has signed as the first big sponsor for BlahGirls, an irreverent animated series starring three snarky, in-the-know and sometmes-raunchy tween characters.