Google eyes ‘AdWords for video’

Google this week began rolling out a new advertising format for videos delivered via its YouTube property. Rather than pre-roll or post-roll video clips, Google has turned to largely text-based overlays (in an interactive Flash format) that take up just a small portion of the screen. Users see a brief message and then have an option to interact and click-through for more information, or send the ad message away.

By making the video ads small and unobtrusive—yet also targeted and interactive—Google can deliver them widely across billions of individual video views (and more than 130 million YouTube viewers) and take advantage of the the volume game. Since YouTube videos can also be embedded on any blog or Web site, the company might even be able to adopt a revenue-sharing model with publishers in the same way that Google drove its text-based ads around the Web with its AdSense program.

Google is testing the new format with a few advertisers as a way to cash in on its $1.65 billion acquisition of the video site. YouTube in the past has experimented with allowing advertisers and marketers to run sponsored videos on the site but has yet to crack the code for how to turn its massive video archive into the kind of money-maker that the Google search engine has become.

According to published reports, Google test video ads resulted in click-through rates five to ten times higher than traditional banner advertising.

Content and network providers will be watching Google’s innovative experiment closely, because as much as it could pay off for Google, the creation of a user- and marketer-accepted video ad format would likely pay dividends for all players—for video delivered via the Web, IPTV and even to mobile devices.

Also this week, fellow video site VideoEgg changed its home page to point out to Google that it’s been running video overlay ads for more than a year. VideoEgg said it has applied for a patent for its approach, perhaps harkening a future legal battle.