TELECOM Digest OnLine - Sorted: Google Reinvents TV Ads With Pay-per-Click Video

Google Reinvents TV Ads With Pay-per-Click Video

Eric Auchard (
Tue, 23 May 2006 15:41:28 -0500

By Eric Auchard

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. But
that represents only 5 percent of the budget 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 totaled
$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 favor 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.

Copyright 2006 Reuters Limited

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