The biggest trend with the Internet is its transition from a passive medium to an active and engaging medium. By that, I mean users can look forward to Internet technologies that deliver much more than static Web pages, search, and blogging to rich media, highly interactive sites, visual, more interesting search (like Bing), and more active media like Twitter. Once this happens, the internet will truly have delivered on its promise of being an interactive medium.

In the online advertising space, ads have been evolving over the last 15 years from the early text to highly interactive video ads. Research has shown that users generally respond better to visual presentations than written text, video is a compelling way to present products and services that are easier to show and harder to describe.

Our industry started with trying to replicate the closest offline medium i.e. TV ads in the Internet. This was a good start, but the results were good but not great as measured by ‘clicks’. The industry has now moved on to make the ads more interesting by introducing interactive elements in the ad. The users actually like interacting with ads rather than just watching them. Advertisers now can actually measure the level of engagement and the response the ad is generating, and if it isn’t generating can perhaps try changing the interactive elements to make it more effective.

Video advertising is a medium for communicating with customers not just the way TV ads did but to become pervasive across the various online ‘channels’ users spend their time on.

For entrepreneurs, this industry is creating a tremendous number of opportunities; however, there are some pitfalls and challenges. Investors have retreated by and large, and so it is hard to come by any one interested in investing for even the most compelling ideas. Second, the space is evolving very rapidly so entrepreneurs need to be very nimble and opportunistic to take the turns in the industry and rapidly respond with the right solutions. Last but not the least, distribution, i.e. getting a large scale customer base, is critical in order to deliver revenue and profits that the investors require today. This is often challenging, given the small size and footprint of most startups.

The author is Diaz Nesamoney, Founder, President & CEO, Jivox