Tue May 23, 2006 05:29 AM ET
By Eric Auchard
SAN FRANCISCO (Reuters) - Google Inc. said on Monday the company is ready to help Web sites run video advertisements, putting the Web search leader into competition with television for the biggest chunk of ad spending.
Google is seeking to take the pay-per-click model it refined for text ads and apply the approach to video, cleaning up a nascent market where irritating splash ads distract users and limit advertisers' desire to spend money on the medium.
Google video ads first appear on Web pages as static screenshots in small television-screen like boxes. Only when a consumer clicks on the screen does the ad begin running inside the box -- instead of jumping off the page as many video ads do -- giving users control over how much or how little they view.
"We are offering a very, very non-intrusive ad product," said Gokul Rajaram, product manager for Google AdSense, which runs advertising campaigns across affiliated Web sites. "Only users who click on the ad see the video."
Google's AdSense network generates nearly half of Google's revenue, with most of the rest coming from Google's own sites.
The new "click to play" video ads complement Google's existing line-up of text, static image, banner and flash animation ads that run on the edges of Web pages of sites that use Google to deliver advertising for them. Google aims to make video advertising as simple to buy as these existing formats.
Video ads will be introduced this week, Rajaram said.
To make it easy for advertisers to use the format, Google will host video advertisements on its own computer servers instead of forcing customers to contract out with a third-party supplier as many video advertisers must now do.
Click to play video ads differ from the scattershot approach of broadcast TV advertising in that Google promises to measure the duration of how long customers, on average, watch any particular ad on a site before moving on to another page.
"It is very good for advertisers because they now know the user is engaged," Rajaram said in a phone interview.
"The targeting is more powerful than traditional broadcast TV," said Greg Sterling, an industry analyst with Sterling Market Intelligence in Berkeley, California.
For example, Sterling said one way Google plans to promote the service as a way for advertisers to test-market TV ads on the Web to determine the best ad for broadcast TV campaigns.
The Internet ad market grew 30 percent in 2005 to $12.5 billion (7 billion pounds). But that represents only 5 percent of the budget that U.S. marketers spend on all media, including newspapers, radio and TV, according to Internet Advertising Bureau data. U.S. ad spending on cable TV alone totalled $18.9 billion last year.
But analyst Safa Rashtchy of broker Piper Jaffray estimates that major advertisers in categories such as autos, finance, entertainment and consumer goods are shifting a growing amount of their spending -- 10 to 20 percent so far -- online.
Such brand name advertisers favour using richer graphical or video based elements in their advertising. This part of the market is where rival Yahoo Inc. has long dominated.
"Brand marketers will take notice. This is going to cause others like Yahoo, Microsoft and AOL to develop some of the same targeting," Sterling said.
"We will see an acceleration of video advertising from here," he predicted.
