Google Making Headway into Video Ads

Last week Google announced that they would begin selling click-to-play advertisements to advertisers in the U.S., Canada, and Japan. It will be a computerized auction service that will allow marketers to place these video ads on publisher Web sites.

The video ads will only be seen as a still image when a visitor sees a site that is in Google’s network of AdWords publishers. Once a user chooses to play the video ad they can adjust the volume, pause, and advance the video. Google hopes that all of this will give users complete control over their experience with these video advertisements.

Before last week’s announcement, Google sold text, flash, and image-based advertisements online. The video ads will appear on the sites of its publisher network, but not on its own Web sites for the time being.

Marketers who wish to take part in this endeavor must provide Google with an already-made video that Google will host without charging “serving fees.” According to Gokul Rajaram, director of product management for AdSense, “If you buy video ads today, there is very little publisher space to buy. Most sell out months in advance.”

Some people see much promise in Google’s latest move. Emily Riley, an analyst at JupiterResearch, said “It will be successful. Brand advertisers have plenty of money to spend on the Google network.” She went on to say that “It’s the next generation” of online advertising.

However, others are more doubtful. Paul Palumbo, analyst and consultant at AccuStream iMedia Research, said “I don’t think they’re going to be as sophisticated out of the gate as, say Yahoo!, who has been in the video ads business for some time.” He added, “But Google has a history of innovation in ad models and can build on what’s been done.”

A big question seems to be whether or not Google can achieve the same kind of keen targeting with these video ads that they have mastered with their contextual ads. “Video ads are interesting and inviting and they add an attractiveness to the Web site itself. The key is that they be relevant to both the page and the users’ interest,” said Safa Rashtchy of Piper Jaffray.

More details of the video ads service were discussed on the AdWords blog:

“First, as with all AdWords ad formats, video ads will compete for placement on sites in the Google content network with other text, Flash and image ads — and, as with our other image ad placements, you can choose to bid on a CPC or CPM basis.

Second, these ads will be supported by both site- and keyword-targeted campaigns. You can choose to serve your video ad on a specific site or on pages in our content network that relate to your product or service. As always, you have the ability to geo-target your video ads internationally, nationally, or locally.”

With the well-known success of viral videos and YouTube, Google’s move into video ads seems to reveal their intentions to capitalize on this movement. It could also be viewed as a chance to redeem Google Video’s flop.

The market has been growing aggressively in recent years. According to JupiterResearch, $140 million was spent in the U.S. on streaming media in 2004, rising to $251 million in 2005. Estimates say that that number could rise to $344 million in 2006.

eMarketer estimates that by the end of the decade advertisers will spend at least $1.5 billion on video advertisements on the Internet.

However, some feel that smaller companies with tighter budgets might not be able to produce video ads. Google begs to differ on the matter, saying “This feature makes video ads much more accessible to all advertisers.”

Publishers will have the option of not allowing video ads on their sites, but according to Rajaram none have so far. Marketers will also be told how many visitors actually play a video advertisement and the average viewing duration of the video.

Google has had 12 beta testers for the video ads service, including Fox Home Entertainment, General Motors, and Paramount Pictures. Rajaram said that that internal testing revealed that video ads did better than text ads in most cases, and that Google would consider showing video ads on Google Video in the future.

Aside from Yahoo!, Google will face stiff competition from Microsoft and AOL. AOL in particular has been strong in its foray into the video realm, buying video search engine Truveo in January and picking up Lightningcast, an online advertising company with a focus on streaming video and audio content, this month.

Google has also been making moves into print and radio advertising, though not in full force as of yet. Merill Lynch thinks that Google’s innovation will help their attempts to diversify and extend its advertising reach, adding that they “envision long-term opportunities for Google to develop partnership to deliver targeted video advertising for on-demand TV viewing.”

Sources:

http://www.webpronews.com/insiderreports/marketinginsider/
wpn-50-20060523GoogleSellingVideoAdsOnTheWeb.html

http://adwords.blogspot.com/2006/05/click-to-play-video-
ads-for-adwords.html

http://news.com.com/Googles+video+replay/2100-1024_3-
6077594.html?tag=st.prev