Google announced last month the introduction of "click-to-play" video ads. This latest move could pave the way for the search leader to garner additional ad dollars from blue-chip advertisers, which allocate sizable portions of their marketing budgets to TV.
"Many advertisers want a rich, immersive ad to communicate with their customers," said Gokul Rajaram, director of product management for Google AdSense. "We believe that providing advertisers with a choice of nonintrusive ad formats improves the advertising experience for Internet users and publishers, and makes their campaigns more effective."
A number of observers said the video ads may help Google attract brand advertisers, which have been an elusive target for the search engine company.
"It's a bridge for Google into brand advertising-which they have a virtually nonexistent position in at the moment-to help them compete more effectively against Microsoft and Yahoo!" said Peter A. Kreisky, president of Kreisky Media Consultancy.
Kreisky said portals such as Yahoo! and MSN have been able to offer branding opportunities to advertisers.
But Kreisky is not convinced the new offering, which he said could help Google capture additional online ad dollars, will have "any kind of seismic effect on ad spending" in other media channels such as TV. "It's another incremental vehicle for advertisers to use," he said.
Others disagreed: "You're delusional if you don't think it's competition to broadcast TV," said Bill McOwen, exec VP-managing director of national broadcasting at MPG, the media unit of agency parent Havas. "All these media compete with one another."
Local advertising affected
He said the most immediate impact it will have is on local newspaper and local television. "It'll draw clientele who couldn't afford cable TV, even at a local level, into using rich media," McOwen said. "This will be the premier way to represent their product for a lot of clients. I'd be all over it."
"We believe new video product offerings and formats could help the Internet better compete for a piece of the $65.7 billion broadcast and cable TV advertising market," said Justin Post, research analyst at Merrill Lynch, in a research report on Google.
Google denied it is competing with television. "There are many ways where click-to-play video ads and television can work together to create better ads," Rajaram said. One way is for advertisers to use the video ads as a test platform for campaigns.
"An advertiser can test more than one ad online to see which one viewers respond to and then place that ad on TV," he said. "Or an advertiser can use existing TV ads and create original online content on top of that to fully take advantage of the immersive, interactive qualities of the Internet."
The video ads will run based on the AdWords bidding model and can be targeted to specific sites or contextually. Both models support a geographical targeting overlay, to a city level. Pricing for the ads can be either cost-per-impression or cost-per-click.
Click-to-play video ads are user-initiated, which Google said preserves the quality of the user experience and gives advertisers access to users who may be more engaged.
Google said the process for advertisers is simple: An advertiser uploads a video file that is up to two minutes long, and Google does the rest. Click-to-play video ads will appear on Google content network sites that allow image ads, and advertisers and publishers do not incur hosting or serving fees.
While it seems clear Google's latest announcement is intended to appeal to large brand advertisers, smaller advertisers may be the primary benefactors of video ads given the low cost of entry and geographic targeting capabilities. "Because there is no additional cost to serving or hosting the ads, even small advertisers can use click-to-play video ads to reach customers," Rajaram said.