Google: Interactive Video Ads Are On Their Way

We’ve already discussed the various ways in which media outlets are trying to monetize their online editions. Now we can take a look at what Google says regarding current monetizing models and what role Interactive Advertising can play.

First, a look at the Online Revenue Sources in the last two years:

Source: IAB Internet Advertising Revenue Report. All sums in Billion U.S. Dollars.

At the Allen & Co. media summit in Sun Valley, Idaho, new ideas and future models were revealed, or at least spoken about by Sergey Brin, Larry Page, Erich Schmidt and other moguls from Google. Some key points worth mentioning:

- Banners and search ads will continue, but more and more focus will be put on interactive ads. Eric Schmidt talked about ‘Interactive Video Ads’, which will appear like a mini-Web page positioned anywhere on the Web page that is being visited, not only inside a video. Users will be able to watch the video and leave comments, while the ads displayed will change instantly to reflect their interests.

- Interactive Video Ads are on their way, but even if Schmidt said he’s confident in their potential, there is no clear date when they will be launched

- Biggest drop in online advertising revenue was in Classifieds, followed by Referrals and Rich media, while Banners and Search media increased a little between 2008 and 2009. Biggest increase was in Digital video, hence the remarks from Google’s moguls.

- In 2009, U.S. web advertising reached $22.7 billion, but this accounted for only 17% of the total advertising market, and while online advertising revenues increased with 7.5% in Q1 2010 compared with 2009, the growth rate declined.

- Media executives and even the clients’ marketers are not eager to experiment on the Internet.  On one hand, content providers are increasingly reluctant to offer their content for free and to monetize it only from advertising, be it display or service-related ads. On the other, marketers are reluctant to experiment with new ad formats in a market that is putting more and more onus on ROI.

- Google doesn’t want to fill the ‘valley from the old model to the new model’ of advertising with ‘very large checks’ for media outlets, and is focusing instead in promoting new ways of advertising and helping companies maximize their ROI from Adsense and, respectively, Adwords.

Bottom line: Interactive advertising will be the foremost growth driving factor in the following years. With its video component, interactive agencies will have to learn how to fully use this new medium in their clients’ interest.