Google opens new front in online ad battle

Google Inc. will soon begin selling video advertisements on the Web, opening a new front in its battle for a bigger slice of the online advertising market.

The ads will appear on Web sites that are part of Google’s AdWords network, which includes partners like and The New York Times, rather than on Google’s own properties. They’ll be offered first in the U.S., Canada and Japan, with other regions to follow shortly, the company said in its official AdWords blog on Monday.

Users will have the choice to click on the ads to start them playing, rather than having them launch automatically. Advertisers will bid to display their video ads alongside the existing text, Flash and image advertisements that Google sells today.

Video advertisements on the Web aren’t new, but the announcement has gained attention because of the massive audience Google commands. It’s also in a pitched battle with online giants like Yahoo Inc. and Microsoft Corp. for a bigger share of the growing online advertising market.

The move comes less than a week after AOL LLC announced that it would buy Lightningcast Inc., which developed a system for inserting ads into online audio and video content and reporting on the performance of campaigns.

In the U.S. alone, advertisers spent US$12.5 billion last year to hawk products online, almost a third more than in 2004, according to a study by PricewaterhouseCoopers. That was still only about 5 percent of overall ad spending, and the amount spent online will continue to surge in the next few years, the consulting company said.

Video ads could accelerate the online growth. They help to narrow the gap between “traditional” Internet advertising, with its ability to target users with precision based on the content they view, and TV advertising, which tends to be less targeted.

Services like Google’s also provide a way for advertisers to test the popularity of ads before running them in more expensive TV spots, said Greg Sterling, principal analyst with Sterling Market Intelligence, a consulting company focused on online search and advertising.

Google’s service will probably speed the growth of online video advertising in general, he wrote in a discussion of Google’s announcement in his blog. “This will touch off the development and introduction of competitive offerings from the major portals and networks,” he wrote.

Google’s service will be launched “in the coming days,” the company said. Advertisers can have their ads placed on specific sites in Google’s partner network, or on pages containing keywords and content that relate to the product being sold.

The ads appear in a small media player that will let users adjust the volume of the ad, rewind or pause it, and click through to the advertiser’s site.

The service will bring video campaigns within the reach of smaller advertisers, rather than just big-name brands, Google predicted.

The AdWords blog posting is at this Web site.

Sterling’s blog post is at this Web site.

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