May 30, 2006 4:00 AM PDT

Google's video replay

Google appears to be in fast-forward mode with its new video ads.

The search giant may have bumbled with the January beta launch of the Google Video hosting service. But experts said the company will have better luck with a new computerized auction service that lets marketers place video ads on publisher Web sites.

"It will be successful. Brand advertisers have plenty of money to spend on the Google network," predicted Emily Riley, an analyst at market researcher JupiterResearch. "It's the next generation" of online advertising.

Google, of course, popularized search-related advertising and has used it to become a company with a $115 billion market cap. Google makes nearly all its revenue--more than $6 billion in 2005--by selling ads that appear on search results pages and on partner Web sites.

Up until last week, Google sold text-, flash- and image-based online ads. Google now offers click-to-play video ads that appear on the Web sites of its publisher network, but not on its own sites.

Under the new service, marketers provide Google with ready-to-show video and Google hosts it but is not charging so-called "serving fees" to marketers, said Gokul Rajaram, a director of product management for AdSense, Google's ad-selling network. Advertisers are eager, he said, to put ads on Google's network because of the dearth of Web sites willing or technologically able to show video ads, he said.

"If you buy video ads today, there is very little publisher space to buy," Rajaram said. "Most sell out months in advance."

Still, Google faces a learning curve when it comes to video, experts 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," said Paul Palumbo, an analyst and consultant at AccuStream iMedia Research. "But Google has a history of innovation in ad models and can build on what's been done."

Safa Rashtchy of Piper Jaffray said the proof would be in the targeting. "The key will be to what degree Google can increase the efficiency of those ads by targeting them," he said. "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."

There's no question video is becoming more popular on the Internet as the success of YouTube and viral videos illustrate.

Now video is increasingly gaining a share of the total online ad market. According to JupiterResearch figures from mid-2005, spending on streaming media in the U.S. rose from $140 million in 2004 to $251 million in 2005 and could hit $344 million in 2006. That compares with spending on conventional online ads, which is estimated to be $8.8 billion this year, JupiterResearch said.

eMarketer, which does research related to the online ad industry, predicts that by the end of the decade advertisers will spend at least $1.5 billion on video ads online.

However, not everyone is ready to jump into the video waters. While large marketers will have budgets to create video ads, that's not the case with smaller companies, who represent much of Google's bread and butter, said Allen Weiner, an analyst at market researcher Gartner.

"I don't believe you can take a 30-second ad from TV and put it on the Web," he added.

Then there's the oft-debated question of whether people really want to click on ads.

In a posting titled "Google PPC Video Ads--I'm betting against it," blogger Michael Arrington listed a number of reasons why he thinks the service will be unsuccessful, including lack of consumer interest.

"First, Google needs to eat its own dog food. It won't be placing these ads on (its) own sites for now," he wrote. "Why? Perhaps their early testing showed that consumers don't want to click on these nearly as often as significantly less intrusive text ads."

So what's Google doing that's different?

Unlike many video ads that automatically play when a user goes to a Web page, Google's ads will not start until the user clicks on them, said Rajaram. Viewers can advance the video, pause it, adjust the volume or click through to the advertiser's site.

Google also hopes it will be a cheap alternative to what's already out there. Via Google's automated auction system, advertisers can bid on a cost-per-click basis, where they pay when a user clicks an embedded link, or on a cost per thousand impressions (CPM) basis. Fees on a CPM basis are expected to range between $5 to the low double-digits, compared with the current online video prices, which can run as high as $100, Rajaram said.

See more CNET content tagged:
video advertisement, auction service, online advertising, marketer, Google Inc.

14 comments

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No video, Go Not-for-profit search engine, go Anoox
Last thing I want to see, or my web site users want to see, is an intruding Video Ad.
If I want that, I will watch the darn TV :(

What I want to see as a web site owner, is a search engine that delivers Ads at much lower costs than Yahoo or Google and one that will not be in any other business but search engine business. That is why I say go with this
Not-for-profit search engine called Anoox:
www.anoox.com

Why pay for the huge profit margins of Yahoo, Google or Microsoft?
So that they can move from $20Mill Silicon Valley mansions to $50Mill ones!
So that they can have 2 more private jets added to their already large fleet of jets!
No thank you. I am going to support my business to make profit, that is why I am supporting Anoox Not-for-profit search engine.
Posted by kathy_torez (26 comments )
Reply Link Flag
Couldn't agree more
Yup, I agree.
A Not-for-profit search engine is the best way to go. That is why I have been using aNOOX too and urging others to do same.
Simply, it is better for us.
After all why should we pay Billions of dollars in profit to Google & Yahoo when we can save that by advertising on Anoox!
Also lets not forget that their search results are better too.
Posted by Manfred Levy (24 comments )
Link Flag
Try some honesty
No one with half a brain believes that you are multiple people. Perhaps if you stopped trying to trick people with your lies (or actually say what this "business" actually is) and simply admitted that you are AnooX, people might give you a chance.

I just gave you a chance, and I regretted it. Most of the searches didn't give good results even on page 5. How can someone vote for something if it doesn't appear. What did I look for? My company, me, and several other random searches. "Lego Crane" was a good one; 1 return about lego and 14 random others, including one for a porn site. Useless. Absolutly useless. "MASM" was better (but not good), but "Apollo 11" was the worst. Not one site to do with the moon landing, even on page 2!
Posted by Andrew J Glina (1673 comments )
Link Flag
Try some honesty please
No one with half a brain believes that you are multiple people. Perhaps if you stopped trying to trick people with your lies (or actually say what this "business" actually is) and simply admitted that you are AnooX, people might give you a chance.

I just gave you a chance, and I regretted it. Most of the searches didn't give good results even on page 5. How can someone vote for something if it doesn't appear. What did I look for? My company, me, and several other random searches. "Lego Crane" was a good one; 1 return about lego and 14 random others, including one for a porn site. Useless. Absolutly useless. "MASM" was better (but not good), but "Apollo 11" was the worst. Not one site to do with the moon landing, even on page 2!
Posted by Andrew J Glina (1673 comments )
Link Flag
OMG!! Stop the capitalism!!
"Jim, are you telling me that a group of people got together, took incredible risks so they might enrich themselves, their community and their families. How wrong!!"

"That's right Bob, if a lot of people are interested in something it should automatically be offered for free. These people at Google sure don't seem to be. I think we must stop this rampant capitalism. It is powering our entire economy and allows many a dolt the opportunity to sit on web sites like this, while getting paid by their fill-in-the-blank university which is taxper and private donation funded (note that the private donations come from capitalist activity), company (my employer pays for me to tell you how bad capitalism is) or straight gov't subsidy because I can't hold down a job, and of course that is funded by the taxpayer who, I know you know this, receives income from capitalist activities."

"Yes if only it was all "fair" and "even" if only we could do that then the world would be a better place. Everything should be free and even for all people, that will surely spur investment, risk taking, and expansion. And damit we must stop this now."

"I think you are right on the money Bob. I suggest we work on a "community" "grass roots" effort to get the governement to stop this inequity, to make it fair for all people to get exactly the same thing."

"This is a great idea Jim. We can get a bunch of teary eyed pansies to testify in congress about how capitalism is enriching their lives and how the gross, flagrant, pursuit of profits is affecting them. We can then hold protests out in front of the damned for profit companies to attempt to force them to stop the pursuit of market share and profits. Then, we can petition the shareholders to give up their investments, to 'do the right thing' and walk away from their money. Then, without resources to invest, the products from these companies will suffer and their customers will go away."

"Then, once we get that rolling that should cause an undermining of the tax base, which will cause the poorest of the poor to suffer. In addition private donations will cease as donors will won't have the resources to contribute. Finally, companies will no longer be able to hire and will in fact have to lay workers off, but, since the goverment won't have any money, these people will have nothing. Selling their goods won't help as other poetential buyers won't have any money either. The whole thing will cause a collapse of the economy and eventually the goverment."

"Yep, that sounds like the right thing to do".
Posted by J. Blow (193 comments )
Link Flag
WOW - this anoox is going to rock the world!
A non-profit search engine that delivers better search results too than goolge or yhoo because its results are made better by majority vote
of the people.
Also did u check, Anoox is Open source & operated by many search engine providers world wide.
WOW, this anoox is going to tear a giant ***** in the plans of goolge or yhoo to dominate the world.

I say dump your goolge or yhoo shares. The party is over!!!
This anoox is the most disruptive service/tech I have seen since Craigslist hit the classifieds with free competition.
Posted by caudio_roma (57 comments )
Link Flag
What video technology? Flash, Quicktime-MPEG4
Anybody?
Posted by technewsjunkie (1265 comments )
Reply Link Flag
Flash
They will land on Flash! It's the only crossplatform alternative right now, and it has a better codec and pseudo-streaming capabilities than the others.
Posted by jcray (1 comment )
Link Flag
 

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