Coming soon to a vlog near you: commercials? On May 23, Google (GOOG) began inserting video advertisements within online programming. The initial ads are part of a test confined to video producers within Google's AdSense network, a collection of Web site publishers that post Google ads on their sites in exchange for a piece of the advertising revenue. If the pilot goes well, however, it's not a stretch to imagine Google inserting commercial breaks into its hosted videos—maybe even on Google video or YouTube.
Hard to Ignore
The test, which does not include YouTube or Google video clips, is the first time Google has placed ads within video streams, though it's a natural progression for a company that has become the leader in online advertising.
In May, 2006, Google began placing video ads in fixed spots on partner Web pages that played when clicked on. It has also syndicated video clips and commercials from Viacom (VIA) on its partner sites. These, too, ran in fixed places on sites (see BusinessWeek.com, 8/8/06, "Google's Duet with MTV"). Google announced the plans on its Web site and in a press release and declined to elaborate or provide names of the AdSense partners in the trial.
At stake is the market for online video ads that in the U.S. alone is expected to rise to almost $3 billion by 2010, according to researcher eMarketer. Typically, advertising in a video stream generates more revenue than do video ads placed on a page, eMarketer Senior Analyst David Hallerman noted in a November report. That's for the same reason some users dislike them: They're harder to ignore. Typically, video ads on Web pages do not even begin playing until a user clicks on or drags a mouse over them. In-stream ads interrupt what the user is watching.
Google has plenty of competition for its share of the video advertising pie. Everyone from Yahoo! (YHOO) to traditional media companies to independent vloggers is trying to cash in on the video advertising market. Yahoo is testing different ways of incorporating video ads on its sites, including adding them at the beginning or ending of clips. "Obviously, there is preroll and postroll, which Yahoo has done a great deal of, and we are also experimenting with other ad formats around video," says Mike Folgner, general manager of video at Yahoo. "There is a good deal of work that we are doing in getting the experience right."
How much will Google's effort change the way we're fed ad messages online? The answer depends on which publishers take advantage of the service. Google would not say whether the AdSense partners involved in the trial are major media companies or primarily smaller Web publishers.
Large media companies, of course, are no strangers to in-stream ads. Often, they insert unskippable commercials in online broadcasts of their shows and, in some cases, before videos themselves (see BusinessWeek.com, 9/11/06, "Click Here to Catch Up on CSI"). And since users are accustomed to watching commercials on televised shows like ABC's (DIS) Lost, why not sit through an ad inserted into the online version?
Looking to enhance
User-generated videos, however, are a different story. Sites that feature them have often relied on the more passive in-page video ads. This is partially because advertisers have been reluctant to spend large sums on user-generated video, which they typically trust less than a known media company. It's also partially because the newer video creators did not want to drive away fledgling audiences.
When user-generated videos have included ads, such as with shows on video-sharing site Revver, the commercials are often appended to the end of the video where they are less likely to bother the audience and more easily skipped—and less valuable to the marketer.
In a press release, Google said that the ads will be no longer than 30 seconds and can be made skippable for users. Publishers will be able to decide where they want to put the ads in their video streams and which videos have ads. Judging from a blog post about the ads, Google will also be watching to see how users react. "We're looking forward to gathering learnings from this pilot and gaining insight into what works best for ads in video," wrote Christine Lee, Google AdSense product marketing manager, adding that users "want ads to enhance their video watching experience, not detract from it"