Israeli startup innerActive has been chosen by ICQ to power the service’s offering of free mobile content to its worldwide users, now amounting to 42 million. The content—videos, games and applications—will be subsidized using innerActive’s in-content ad injection technology.Over the past year and a half, innerActive has been busy carving out a name for itself as a company aggressively pushing its monetization offering to mobile carriers and portals in Europe. The company’s core technology is the ability to dynamically inject advertising into mobile games, applications and video—content which has strong user engagement, but has yet to live up to its revenue generating potential (at least in the amounts players in the mobile industry hope for). The company has strategically chosen to stay clear of any attempt to monetize the mobile Web and focuses specifically on the monetization of content.

innerActive describes its solution as an “Ad-funded AppStore,” a sort of agnostic platform for mobile operators that provides everything from the hosting and delivery of the content, to the campaign management and media planning, to the actual ad serving. The company also works directly with content publishers to create an ad-funded catalog. Co-CEO Offer Yehudai explained to me that it was this end-to-end solution that was key in having ICQ select its solution over alternatives. Under the terms of the deal, both innerActive and ICQ can sell ad space and there’s a flexible rev-share model to support such an arrangement.

The content requires a certain amount of prep work in order to be “innerActive ready”. An SDK is available to publishers, allowing them to tag areas inside their content for ad injection (view the video embedded below to see a typical end result—billboards in a game with real, clickable ads). The SDK supports all mobile OS’s and does not require any porting—”hundreds of handsets” are supported. Ads can be configured for click-to-WAP, calling, coupons, polling and the download of content

ICQ will make all this free content available to its community from its mobile client, from a soon to be launched ‘ICQ Mobile Portal’, and through the desktop application. The latter will require the entering of a mobile number and then receiving a free SMS with a link to download the content. No client will be required to be installed on the handset.

All-in-all this sounds like good news for ICQ’s users. The big question of course is whether offering ad-supported mobile content is a financially viable model. I guess we’ll find out soon enough because if innerActive can deliver CTR’s of up to 15% (as they claim), advertisers will be knocking on their door in droves and users will benefit from a growing selection of free content.

Straight out of the “why didn’t they think about this before” department, comes VidPay whose entire premise can be summed up in a single sentence: A white label platform for sponsored video campaigns. There must be more, right? Wrong. VidPay is as dead simple to use as it is to comprehend. One more thing… It started generating revenue from minute one. What more could you ask for in a startup?To appreciate my gushing enthusiasm over VidPay you must understand that one of the occupational hazards of writing for TechCrunch requires the deciphering of what startups actually do. Increasingly rare are startups like VidPay that offer straightforward value for its customers and have a CEO that knows how to intelligently communicate what the product actually does without overselling it or using tiring hyperbole. So let’s dive in:

The problem VidPay set out to solve is allowing small/mid-sized advertisers to promote their videos on sites such as Metacafe, Dailymotion and Vimeo. These sites usually don’t have dedicated sales teams to support such advertisers because they focus on larger, more budget-laden campaigns.

MetaCafe is VidPay’s pilot customer and through this partnership alone VidPay is serving ~50M sponsored video impressions per day, or ~1.4 billion per month. Current click-through rates are between 0.1% and 1%, depending on how many video ads are displayed in the sponsored video sections, and whether campaigns are targeted for specific keywords or not.

VidPay’s solution is a self-serve advertising platform for sponsored videos. It is similar in concept to YouTube’s “Promoted Videos” offering, differences being: 1) It allows campaigns to be built for multiple publishers (video sites), and 2) Its interface can be integrated right within the publisher site. The second point is important because it means that any video site can integrate a fully branded self-serve sponsored ad platform with zero investment, and begin reaping revenue it was previously unable to bring in.

For video sites, integrating VidPay functionality is a two step process. First, the video publishing site needs to send VidPay information such as visitor IP addresses, the category being visited, current item tags and the maximum number of sponsored videos to display. Second, the publisher site needs to receive a list of sponsored videos from VidPay and then display them of course. Completing these two steps should take no more than a few hours. Integrating the interface is optional and would require the use of an iFrame.

On each page view, the publisher site sends an HTTP request for sponsored videos to be displayed in pre-defined locations. VidPay returns the best-matching sponsored videos to display by taking into consideration the maximum cost-per-click, click-through rate and targeting parameters such as geo-location and language. The sponsored videos are all located within the publisher’s inventory so all traffic remains under its umbrella. Advertisers can choose the videos they want to promote manually, search for them through VidPay’s interface, or upload them to the publisher site right from the VidPay interface.

This post was originally posted on TechCrunch.com where I cover the Israeli startup scene.