Google first started experimenting with video ads about 18 months ago.  Videos represent a pretty obvious win from the perspective of advertisers and the search giant; even people who have long since become used to ignoring text ads are apt to notice and watch them.  So marketers would have a fresh way to reach consumers, and Google could reel in more revenue.

According to Brian Womack, Nick Fox, a director of business product management at Google, also claimed, "It’s clear that this is something that users want.  It ties back to trying to understand what a user is doing on Google, what an advertiser is trying to sell — and matching those up."

And indeed, it makes sense that someone searching for info related to the movie "Extract" would want to see the trailer.

These experiments may well be deemed a success and turn into something more permanent, then.  But given the 18-month think-it-over period that’s already passed, no one should hold his breath.

comScore’s Gian Fulgoni breaks down what was actually taken into consideration for "display-related" ads. This includes banner ads, rich media, video, and sponsorships. Take a look at comScore’s chart:

So by these numbers, banner ads actually increased by 8% in a year’s time, and videos grew an astonishing 74%. Of course there is nowhere near the amount of money being spent on videos as there are for banner ads.

"Is it, perhaps, that the tough economy is behind these shifts, causing advertisers who are already using the Internet to shift dollars from more expensive rich media and sponsorship formats to cheaper banner ads?" asks Fulgoni. "I think it’s very likely that that is indeed happening. It’s also possible (and I hope this isn’t just wishful thinking on my part) that advertisers are beginning to recognize that a display campaign overlaid on a search campaign can produce some valuable synergy. The results of comScore’s research have certainly shown that this synergy exists."

Interesting point. That reminds me of an article I wrote last year on that very subject. The bottom line is that you have to stick with what advertising methods work for your business. Experimenting is certainly encouraged, but that’s why there’s testing. Figure out what works, and build upon it. You are likely to find that a combination of different methods will work together nicely.

 Blackberry’s Google Video Ad

Assuming Google doesn’t stray from its current approach, ten talking pictures will not compete for your attention every time you search for "shoes" or "computers."  Instead, it takes a degree of effort to see a single video; you’ll need to perform a search, look at the right column we’ve all learned to ignore, see if there’s a "Watch commercial" option, and finally, click on the thing to expand it.

We’ve taken a screenshot of what should happen if you follow those instructions for a "smart phones" query.  Barry Schwartz deserves a tip o’ the hat for first using this combination of words, and Amit Agarwal gets another one for apparently being the first person to spot video ads in the wild.

Implementation seems to be a bit spotty, so don’t blame us if you can’t reproduce their results.  Yet it’s likely that Google will go forward, and not back, with the rollout, since Marissa Mayer herself is a proponent of the project.

To users, we say, "remain cautious."  To advertisers: "do your happy dance."

WebVideoReport wrote an article that reviewed the ad sales web pages of eight sites that sell video ads.  The prices noted are public asking prices which are typically discounted or included at low cost or free with purchase of other web ad inventory. 

Only three of the eight sites provided their rates on a standard CPM basis:

WSJ.com – $90 CPM
Metacafe – $35 CPM
MySpace.com – $25 CPM 

Other rates mentioned in the article:

» A video ad in the Garfield’s Ad Review feature costs $15,200 for four weeks.

» YouTube requires a $50,000 spend within 90 days and up to $100,000 per day on the YouTube front page. No CPM mentioned.

Video advertising on the Internet is still nascent and you can bet that it is heavily discounted to get mainstream advertisers to try it. One of the obstacles for large advertisers is that outside of YouTube very few sites have enough video views to deliver significant consumer reaction.

And even with YouTube unless you are a company used to advertising on America’s Funniest Home Video’s their audience may not be too appealing to you.

What is more promising is business video evidenced by the premium pricing demanded by the Wall Street Journal. In our testing here at WebProNews we have also seen reasonable demand for our business related videos.

YouTube Videos Premiere On AdSense

YouTube has a new job, supplying Google’s AdSense with video for a new set of advertising units. The move comes as Google prepares to announce its third quarter financials on October 18th.

The AdSense blog discussed the process:

Simply embed a snippet of code and have relevant YouTube partner content streamed to your site. You can choose categories of video to target to your site, select content from individual YouTube partners, or have video automatically targeted to your site content.

Companion and text overlay ads are relevant and non-intrusive. To further blend the YouTube player into your site, you can also customize the color scheme and layout as well as choose from three different player sizes.

Publishers may place one video unit on their pages. Google said the text overlay ads, seen on some YouTube videos already, will occupy the bottom 20 percent of the video during playback, while companion ads appear above the video content within the player.

On the money side, these ads will be delivered on a cost per click or a CPM basis. Publishers have some control of the videos arriving in the ad units, as they can choose individual content providers or content categories. They may also opt for automatic targeting of video content.

Google claimed video units will be updated frequently and automatically, to keep the content fresh for viewers. The current popularity of online video suggests Google’s new ad units should find swift adoption among its AdSense publisher base.

Video Streams And Ads

The average user watched 10.6 streams per month per site in 2006, not including streamed video ads. This was an 11 percent decline from 2005 because of increased competition from the growing number of content providers. Interestingly people visited more sites but watched fewer streams on each.

Music videos accounted for 36 percent of total streams, while news streams made up 24 percent. Streaming increased because of more quality content available to watch according to Paul A. Palumbo of AccuStream. He also cited "old-fashioned syndication relationships with aggregators who can deliver audiences and began to populate emerging distribution platforms. Moreover, a growing base of high speed users and the adoption of Flash propelled the market."

A study by Insight Express carried out for Advertising.com found that news and video streams were the most popular types of content for viewers. News clips were favored by 48 percent of respondents, followed closely by music videos, which were preferred by 47 percent. Movie trailers rounded out the top three with 32 percent finding them appealing.

While ads pay for some of the content that drove streaming growth last year, eMarketer senior analyst David Hallerman believes that the market for streaming ads may have built in limits. "The current video ad inventory shortages both create higher CPMs and hold back a fuller flourishing of this market," said Mr. Hallerman.

A June 2006 McKinsey & Co. report found that Internet video advertising was 80 percent sold out in 2005. "Assuming that marketers don’t increase the number of ads they place in each video stream, the maximum supply of video ads is currently about $600 million a year – far less than future demand," noted the consulting firm.

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