Web search giant unveils new strategy
Could the Google upfronts be far off?
That scenario gets a bit more plausible today, as Silicon Valley’s Web search behemoth unveils a new thrust in its video advertising strategy.
“Video units” — essentially Internet video players that can be integrated into a website — will display two different kinds of advertising, both pegged to the content of the site and the subject matter of the video itself. Content in the players will come from YouTube, the video-hosting service Google bought last year for $1.65 billion. The resulting revenue will be split three ways, with the site owner, content owner and Google all taking a slice.
The video units are part of Google’s AdSense advertising network, which generates a big chunk of the company’s revenues, $1.35 billion in the second quarter alone.
Google had earlier begun placing video ads on the thousands of sites that are part of the AdSense network, and YouTube recently began to test ads that played during its videos.
But the move marks the first time Google has explored blending ads with YouTube content that screens on other sites, supported by a business model that could make everyone happy.
Google AdSense manager Christian Oestlien wouldn’t detail the specifics of the revenue split except to say that it is “determined on a case-by-case basis,” offering the possibility that big content players will get a richer cut than amateur videomakers. Oestlien says more than 100 of YouTube’s content providers are already participating in the program; content isn’t included without an OK, and content owners can prevent certain sites from showing their stuff.
The two types of ads to be displayed within Google’s new video units are “a banner ad that will sit on top of the player at all times,” Oestlien said, and a so-called overlay ad, which will pop up after the video has been playing for 10 seconds. The bulk of the ads will generate revenue based on how many user clicks they accrue.
Waikit Lau, president of ScanScout, a startup video advertising company that now finds itself competing with Google, said he doesn’t expect Google to win over scads of new content providers with the offering. Lau observed that most major media companies keep their most precious videos on their own sites, not YouTube, and that they may be wary of Google’s help in placing advertising.
“There are a lot of media properties that consider Google a ‘frenemy,’ and they might balk a bit at letting Google monetize their video and getting access to all their viewership information,” Lau said, adding that ScanScout and others will now position themselves to be seen as “the alternative to Google.”