A recent study questioned whether online video can make money since ad revenue is limited. That’s almost surely a temporary problem.

Smart online video sites are going to use the digital and interactive aspect of online video to develop an advertising platform that will quickly outpace free-television. Your history on online viewing not to mention other information the sites have on you will enable them to customize ads that will get inserted around–and perhaps even in–online videos.

Some of these “contextual ads” will take people to infomercials that can provide far more useful detail on products than what’s on television. And unlike television ads, consumers will be able to purchase some goods or take some action that will increase their chances of buying.