Google to test video, display ads

Google will launch a public test to show display and video ads on Google Video as soon as Thursday or Friday.

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The move is another step in the search giant's slow exploration of graphical ads on its own services, say sources familiar with the plans.

Google plans to announce it will stream for free some premium videos on Google Video which are normally fee-based, and accompany them with a banner-like ad and a video ad possibly.

The banner-like ad will be displayed for the duration of the video on the Google Video player interface, while the video ad will be shown after the clip ends, sources said.

The ads and the videos will not be matched at random. Instead, advertisers will choose the videos they want to sponsor. In this manner, advertisers will avoid having their brand associated with a video they find objectionable.

The Google Video test may be short, running for only a week, and the ads will be attached to about 2,000 videos from about 8 providers. The videos will be from professionals, not amateurs. The test involves about 5 advertisers who are paying to participate.

After the test, Google is likely to continue revising and refining how it plans to display graphical and video ads on Google Video, sources said.

Possible motivation behind the test is that Google is responding to advertiser interest and feedback. It may also be testing ways to attract more users to Google Video, by making some fee-based videos available to all visitors.

Currently, Google Video clips are either free or fee-based. Until now, video clips haven't been supported by ads.

Google didn't respond to several calls seeking comment.

Google, whose revenue comes almost entirely from pay-per-click text ads, is under pressure to diversify its advertising mix and has indicated an intention to expand the scope of the ad formats it offers its advertisers. The company cited its interest in exploring display and multimedia ads as a reason for extending its partnership with AOL at the end of last year.

Rival Yahoo has a much more balanced ad-revenue mix that includes pay-per-click text ads, banner ads, classified listings and rich media ads, among other things. A big concern about Google's overwhelming reliance on pay-per-click ads is click fraud. Some experts estimate that as many as 20 percent of the clicks on these text ads may be made maliciously, without any intent to do business with the advertiser.

Guzman & Co. financial analyst Philip Remek, who is unfamiliar with the Google Video test, wasn't surprised to hear about the plans.

"They're really trying to take on Yahoo here with a multiple-platform approach to online advertising, especially for big ad clients with brand names to promote," Remek said. "I expect them to make a push to [graphical] advertising. It's part of their strategy,"

Google has been wise to keep graphical ads out of its main Google.com search result pages, where the contextually-generated text ads are the most appropriate format, Remek said. However, the company's Web portal-like services, such as Google Video, Google Finance, Gmail and Google News, could be good places to run graphical ads, he said.