(Disclaimer: Although this post has been written by TechNation Australia writer Lee Goodman, TechNation Australia editor Kim Heras is a co-founder of uTag)

uTag is one of the sites that started life at the first StartUp Camp Australia held in Sydney last weekend.  In just 48 hours, ut.ag went from conception to launch in a weekend of extreme coding, design and marketing (including the birth of a new extreme PR tactic - “TwitterBombing”) .

The uTag team is:

• David Vandenberg
• Hugo Sharp
• Kim Heras
• Matt Fisher
• Nick Holmes a Court

In their own words Ut.ag describe their solution as

“A turnkey system that allows web 2.0 sites and individuals to generate revenue and retain attention from every single outbound link.”

In reality, ut.ag is a URL shortening service with a difference in that it actually attempts to monetise the outbound traffic from a site.  This is achieved by placing a “small” banner ad at the top of the destination page of any link clicked within a site.

According to the ut.ag guys there are 2 billion shortened links clicked on each month within Twitter alone so there is obviously huge potential.

There are currently two flavours of the system, Vanilla and Cherry, the former aimed at blogger and Twitter users with the latter geared towards the website and platform owners.

To enable Vanilla utagging you simply go to the ut.ag site, paste in any external links you will be posting along with your PayPal email and a shortened URL will be provided for you to send around.

To enable Cherry flavoured utagging across your site you simply go to the ut.ag site, enter in your paypal email and a small piece of java script is created that you paste into your site code. This will turn all outbound links into ut.ag shortned URLs. It’s a nice set and forget feature that will probably lead to suprise payments in people’s paypal account down the track.

In both cases you earn revenue from any click through on those links, with ut.ag taking a small percentage.

One thing that immediately comes to mind is that they will need to nail the contextual / targeted side of it to stand any chance of gaining traction.  Internet users already routinely experience unwanted pop up ads and I for one have well developed “admunity”, although the guys do state that the ability close the ad banner easily was a choice they made specifically to address this problem and the web page is still rendered below so there is no clipping of the site’s content. 

ut.ag is already getting a lot of attention if the site’s blog is anything to go by. The idea of outbound links being monetized is clearly going to be a discussion point for some time. Already the community appears to be split on whether or not it is “evil”. Time will tell what the final decision will be.

If ut.ag doesn’t represent a paradigm shift, as the team claims, then if nothing else it at least demonstrates what can be achieved in a massively condensed timeframe when you have a good team with a passion for technology and entrepreneurship.  Pretty impressive by all accounts, can’t wait to see what comes out of the next StartUp camp!