Overlay.TV has launched its online video advertising platform as planned, with 600 merchants agreeing to accept user click-throughs from its solution.

The Ottawa-based company, which recently received $4.6 million in its first round of venture capital funding, introduced its platform which allows online video publishers to make money off their content by linking images within the video to marketers' websites.

"By linking publishers, viewers of online video and marketers, Overlay.TV is transforming user-generated video content from a passive vehicle for entertainment or education into an interactive vehicle for commerce," said Overlay.TV CEO Rob Lane in a statement. "We're empowering a whole new generation of publishers – a group we call 'Generation P' – with a user-friendly platform that will help them discover entirely new business models."

The new platform allows publishers of streaming videos from sites such as YouTube, MySpace TV and Google Video to overlay pictures, words and graphics on top of their videos and link to products or information on external websites. They can then embed their overlaid videos to blogs, personal websites, social networking sites, and so on.

In fact, Overlay.TV has developed an application for Facebook users to allow them to access the Overlay.TV site through their Facebook accounts.

Video viewers will have to option to receive the overlays, which will allow them to directly click on images in the video to find out where they might buy the products seen in the video.

The company noted that several large marketing affiliates had agreed to accept user click-throughs from Overlay.TV, including Amazon.com, iTunes and Wal-Mart.

"By putting the user at the centre of the online video revolution, Overlay.TV has enabled the fusion of consumer-created advertising and non-intrusive but active participation by online video viewers," Mr. Lane said. "The Overlay.TV platform has pioneered how digital content can be enhanced, shared and monetized."