As it turns out, the revolution will be televised, or sort of televised anyway. Actually, it starts as a commercial.
Google introduced a new age of advertising earlier this week by announcing plans to distribute video commercials on websites in its pay per click AdWords network. The move opens the once exclusive marketing channel of televised ads to a far wider array of small and medium businesses.
Video advertising on websites is not, as such, revolutionary. Online readers of major newspapers such as the New York Times or Wired News are likely familiar with the 30-second IBM dinosaur-head commercials or video ads from the History Channel and Microsoft. The spaces these examples run in often cost as much or more than standard TV ads would. The revolution, as always with the web, revolves around an axis of access and contextual distribution.
The sudden appearance of Google’s online video ad distribution service is going to have multiple repercussions for the $38 Billion US television advertising market. It is also going to present multiple opportunities for search marketers and their clients.
Google users shouldn’t expect to see video ad content on Google branded websites such as Froogle, Google News, or in the general search results, not yet at any rate. The New York Times reported yesterday that the company is, “… considering doing so in the future.”
Starting today, Internet users in the US , Canada and Japan , will see an increasing number of click-to-play video boxes appearing amongst standard text-based AdWords ads on websites displaying Google generated advertising. An example video ad is posted on Google’s Inside AdWords Blog, appearing in a passive-play mode allowing viewers to click on it before it runs. Others have been spotted at, dictionary and translation site, WordReference.com, and on the front page of Blogthings.com.
According to Inside AdWords, “… video ads will compete for placement on sites in the Google content network with other text, Flash and image ads.” Advertisers will bid for placement of their video ads using the same cost-per-click (CPC or PPC) or cost-per-thousand impressions formulas used by competing AdWords advertisers.
The pay per click advertising model is widely credited as the primary factor behind the rapid growth and evolution of the business of search. Google makes over 9/10 of its money from paid search ads showing consistently higher revenues based on the strong growth of its various search advertising services.
A sizable chunk of those revenues have come from the traditional media. The newspaper and magazine sector is trying to diversify online revenue streams, reeling under the weight of eBay, Craigslist, Google and Yahoo. The advent of pay per click video advertising is likely to place broadcast and cable networks in a similar or even less enviable position.
In an Adweek essay published in December 2005, Noreen O’Leary details the multiple challenges faced by traditional advertising distributors when confronting consumers who expect on-demand content delivered immediately. Noting the shift in advertiser spending patterns, she writes, “There was a 25-year lag between when network TV reached mass consumption and when ad dollars caught up. It took 15 years for cable. After 10 years, is the same about to occur for the Internet?”
A lot more money is about to move into the online medium. Even if the next six to twelve months are more a time of trial and testing, there is no way advertisers are going to resist creating their own video ads. The applications for advertisers are endless and suddenly very inexpensive. Search engine marketers, website owners and online advertisers should be preparing to deal with the video advertising market as it expands.
Google appears to be making it as easy as possible for smaller advertisers to upload video ads by allowing for any video format. Video ads are uploaded to Google servers where they are stored and served based on contextually similar content found on the sites displaying them.
“A large percentage of video ads will come from small advertisers,” said Gokul Rajaram, a director of product management at Google in an interview with the New York Times. “A small resort owner in Maui probably already has video of their great beachfront property. Now they can put it in an ad and reach a qualified set of users.”
Small to medium sized advertisers also have the ability to geographically target ads and to test different versions of their video ads. One of the greatest benefits of online advertising is the ability to track where every click came from and when, giving advertisers and marketing professionals a great deal of instant information about what does and does not work.
In his Screenwerk blog, Greg Stirling notes that the number of targeting options, combined with the ability to track click patters could also benefit larger advertisers testing consumer reaction to commercials before they commit to a much more expensive ad-spend across broadcast or cable television. “One use of this system (and presumably others that will develop shortly) is to “A/B test” creative before launching a campaign on TV. This is sort of like what’s being done by some marketers who get users to vote on several different versions of the same campaign online.”
This is potentially the most disruptive move Google has made since the day it opened its doors. Paid search advertising will have a driving force in the migration of advertising money away from the traditional print and broadcast media. That migration, in turn, will cause enormous changes in the search marketing sector.
The timing of Google’s announcement coincides with the purchase of the broadband video advertising firm Lightningcast by AOL last week. Lighningcast inserts commercials into online video content found on sites such as Space.com and Nascar.com.
Unlike Google’s video ads, Lighningcast executive Matt Wasserlauf is quoted by the NYTimes saying, larger marketers would rather their commercials be included in streaming content instead of being an include on a static web page. “No one will click to watch a Pampers ad,” he said. For example, he said, Procter & Gamble would rather “put Pampers on relevant or entertaining content.”
What consumers prefer remains to be seen but, if Google has placed its bets well, allowing consumers and advertisers more control over choices made in the process of exercising their preferences can only be a good, and incredibly profitable, thing.