In Depth

Daisy's Digital Diary: The Sleeping Giant is Most Definitely Awake

Over the last year, video ad targeting firms have quietly and openly wondered when Google would make its move to match online video with ads.

As companies like Digitalsmiths, Blinkx, YuMe Networks and Adap.tv struck deals to pair video content with relevant ads across the Web—YuMe and NBC, DigitalSmiths and Tremor Media—Google stayed quiet, mostly playing around with ads on YouTube.

But Google isn’t quiet about its online video monetization ambitions anymore.

Google announced last week that it had extended the reach of it Video AdSense network, which matches online video content with relevant ads, to several high-profile partner sites.

Google had first tested overlay ads solely on YouTube videos late last summer. But now the world’s biggest search engine has brought new video partners into the fold: BobVila.com, eHow, MyDamnChannel, ExpertVillage, PinkBike, TheNewsRoom, Revver, blip.tv and GodTube. Several video technology firms are now serving overlay ads in their videos via the VideoSense program. They include Brightcove, YuMe Networks, Tremor Media and Eyespot Network.

The expanded reach of the program will likely be an important step in the red-hot growth of online video advertising, a business that should jump from $1.4 billion this year to $4.3 billion in 2011, according to eMarketer.

But perhaps more important is the signal this should send to the marketplace. Did anyone really think Google wasn’t going to be a serious competitor in online video targeting? This is the company that figured out how to extract all sorts of pennies from all over the far-flung corners of the Web to the tune of a $6.3 billion business last year.

Nearly all of Google’s revenue comes from advertising: AdWords (paid search listings) and AdSense (Google ads on partner sites). Even though AdSense saw some declines last quarter, the product is still a powerful one.

Google’s got another advantage too. Um, it can kind of marry search and content and advertising prowess.

Competitors, be warned.

Google believes there is money to be made in online video. Probably a lot of money.