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Online video continues to rise in popularity, and advertisers are still scratching their heads about how to make money from the YouTube phenomenon. According to a recent press release from Comscore, “More than three-quarters of the total U.S. Internet audience (75.7 percent) viewed online video [in January].” And that’s only U.S. internet users. Despite this growing trend, online advertising giant Google has yet to make money on web video ventures, despite owning the largest and most popular site, YouTube.

One reason advertisers haven’t jumped at the online video market may be the nature of user-generated content. They’re afraid their message might be associated with unflattering videos. As a recent article in the Globe and Mail explains, “Many advertisers, for now, are staying away for fear their ads could inadvertently appear with clips that have nudity, foul language or perhaps criticism of their brand.” After spending $1.76 billion dollars to acquire YouTube, though, Google is determined to soothe these fears.

One new strategy is to place advertising in the form of banners or clickable text within a larger video. This will allows advertisers to partner with appropriate videos for their products. For example, a banner for iTunes might be placed on a video for the latest band to hit it big in the viral world. The service also allows advertisers to target ads based on a number of criteria. Their ads can be direct by demographic factors like age, gender, geographic location, or even time of day, eliminating the risk of placement solely based on content.

The other strategy which Google is pushing is for clickable video ads to appear on sites that are a part of their content network and as a sideline on Google search pages. The ads will play with a click, not automatically upon navigating to a page. A good example of this can be seen with this Adobe ad featured on AppleInsider. This also allows clear, directed targeting to eliminate some of the guess work in online video advertising. For example, a Google user who searches for “flower arranging” might be greeted not only with websites on the topic, but also with a 1-800-FLOWERS video about their latest promotion.

In addition to the promise of targeted ads, Google is trying to lure advertisers with the promise of measuring user interest, something which traditional advertising venues cannot provide. As their AdWords page on clickable video ads explains, “We’ll report a clickthrough whenever a user clicks the display URL and visits the advertiser’s site, rather than when a user clicks the play button or image.” This is a more accurate count of interest in a product, as it can measure how many users take action, not just how many users view the video. The pricing for AdWords video is also prorated based on clicks, making it more accessible to companies of all sizes.

While these new services do not guarantee that online videos will start making money for Google, they do pose a significant threat to television and print advertising. It is much cheaper to advertise online than on a television broadcast, and the ROI of any given campaign can be measured immediately and accurately. These benefits could lure companies away from traditional advertising venues to take advantage of the popularity, low cost, and targeted nature of online video. If Google’s plans are successful, we’ll be seeing a marriage between sponsored and user-generated content on our favorite web video sites.

Wednesday, March 19th, 2008 You can skip to the end and leave a response. Pinging is currently not allowed.

By Haley January Eckels