Google and that elusive diversification

After what PaidContent says is at least four months testing, Google is to officially launch its video ads programme. The new format, which is deliberately unobtrusive until the user clicks on the ad and activates the video stream, is being described by Reuters and others as "pay per click video".

Palpably, it is no such thing. "Pay per click" in SEM means paying every time a user is tracked clicking through to the advertiser's own website, clearly signalling engagement with a commercial opportunity in the context of a direct and immediate intention to buy. "Pay per call" means paying when people seeing an ad call a dedicated, tracked telephone number. Calling videos that merely start to play when the user clicks them "pay per click" is disingenuous - this isn't a response-based ad service like AdWords, it's another shot by Google at that elusive diversification out of its only meaningful revenue stream.

A couple of months ago I commented on how badly Google had failed to transfer the value of its long tail of AdWords advertisers into print. Google bought up some spare print ad space and tried to sell it to the AdWords network, only discovering during the course of the experiment that print advertising simply isn't set up to deliver the sort of direct, measurable response that is at the heart of AdWords buying decisions. Fair enough. We live, we learn about ROI, we move on.

Now Google is trying to pull off the same trick in another medium, selling brand-led ad slots to response-driven advertisers. Possibly it will work better than in print  - there is at least something to measure this time and response-hungry buyers will be able to see how often and for how long users engaged with their video ad footage. But the same problem as faced Google in print remains - a fundamental mismatch between the values of the advertising constituency they've captured and the values of the medium they're now encouraging that constituency to use.

Update: TechCrunch says something broadly similar and gives Google's alleged "pay per click" video the thumbs down. Looks like "Google gets it wrong again" isn't even the contrarian view...

Comments

[michael arrington]

great post

[Clifford Brown]

I guess you can look at the magazine ad buying experience as a failure for Google, but isn't it really a much bigger failure for the magazines? Sounds to me like the advertisers who tried it got nowhere near enough response to justify it economically. Now, perhaps they built some sort of unmeasurable "brand value" that will pay off over the long term, but we'll never know for sure.

Similarly, if the pay to watch the video ads fail because insufficient numbers of people click on them, does that really reflect negatively on Google? It sounds to me like it would reflect negatively on the video ads.

[Ben Blank]

I agree that video ads will not provide much value to advertisers who only purchase advertising with directly measurable ROI. However, this does not mean Google Video Ads are destined to fail. National advertisers currently spend a significant amount of money running TV commercials with little or no directly measurable ROI. If google provides a new "channel" for these advertisers, and it can be done in a way that web viewers will choose to interact with, it might be a great opportunity for Google to tap into budgts previously reserved for TV...

[Kryai]

Read a blog earlier on the incestuous relationship some blogs now have. Two blogs that link back to eachother for sources this blog(s) is a prime example. That certainly doesn't take away from the validity of arguments but it does seem quite circular in terms of sources.

[tom sherman]

One thing people seem to be missing is this simple deduction.

1. Video ads take resources to produce
2. Resources are held by large advertisers
3. Large advertisers care about their image
4. Image cannot be easily controlled via participation in Google's advertising network

This is why ad firms work directly with large publishers and third-party ad management tools (Doubleclick, etc.). They want to control their ad campaigns, where their ads will show, how their brand is perceived. This will not happen with Google.

[Mike Bijon]

Thanks for your comment Seamus. I'm happy to clarify why the Honda cogs ad supports my argument that Google's PPC video ads are a good idea.

Those video ads did become viral, but they needed to be seen by someone before taking off. Without a single eyeball to watch them being played it's unlikely that the creators could have stirred the same response by forwarding the video or a link to it via email. Forgetting the cost of producing any ad, it seems to me that it would be a lot less costly to target something like a tech-savvy auto ad at young car fans with Google's engine than it would by aiming at some mix of ESPN, Speed Vision, and a few PC hardware reviews. ...that being said YouTube is even less expensive, but you would give up any ability to track the response to your video and possibly learn how to improve the next one.

[Seamus McCauley]

Mike

YouTube is less expensive for users because the YouTube business model is old-school dotcom "let's burn through a load of cash and see what happens" - I wrote about this a while ago at http://qurl.com/7gpzj.

In which case, perhaps the Google video ads will be the best long-term solution for kick-starting a viral ad campaign. I'm still not sure that's a niche that's going to be worth a lot of money to Google, especially in the context of what it makes from AdWords, but you make a good case and I won't be surprised if that's how things play out.

Seamus