Google Makes Big Play For Online Video Advertising

Google on Thursday launched a major video advertising program that leverages the company's YouTube unit and ad network in hopes of capitalizing on the explosion of online video.

Google unveiled the long-awaited AdSense for video, a week after it started testing text links to video ads alongside search results, a first for the Web portal. The latest program, launched in beta, gives advertisers the option of placing text ads overlaid at the bottom of a video viewer. Advertisers have the option of showing a video ad, if the viewer clicks on the overlay.

Google's approach is less obtrusive than showing an ad before a video plays, similar to how an ad is displayed on TV before the start of a show. The company is hoping its approach will be less likely to turn off viewers and position it to grab a sizable share of the growing online video advertising market, which today is a small fraction of the $20 billion spent on Internet ads in the United States.

The majority of Google's $16.6 billion in revenue last year came from text ads running alongside search results and on its partner network. To date, Google's attempts to expand its options for advertisers have failed to generate much additional revenue. Those options have included placing ads in traditional media, such as newspapers, radio, and TV stations, and on mobile phones.

With AdSense for video, Google is opening up YouTube, the largest video site on the Web, to all advertisers, whose ad overlays would run on the videos of creators who have agreed to be part of the program. Creators would share in the ad revenue.

As part of the new program, Web site owners can choose to embed in their pages ad-bearing YouTube videos for a slice of the revenue.

Google has started AdSense for video with a number of partner sites that include video sites Revver and Blip.Tv, and video technology companies YuMe and Brightcove, which distribute video content and ads to their own networks.

Google competitors include a number of startups, such as VideoEgg. In addition, Microsoft and Yahoo also deliver video ads to their partner sites. Yahoo this month announced the $160 million acquisition of Maven Networks, which provides technology for delivering video content and ads to more than 30 media companies, including Fox News, Gannett, The Financial Times, Hearst, E.W. Scripps, and CBS Sports.

In December, nearly 141 million U.S. Internet users watched more than 10 billion videos, according to ComScore. Video lovers watched an average of 3.4 hours of video during the month, representing a 34% gain since the beginning of 2007. The average online video lasted 2.8 minutes, and the average viewer watched 72 videos.