Google Eyes More Web Video Deals

Sep 4, 2006  •  Post A Comment

Google wants more than just its MTV.

The Web giant, which last month struck a landmark agreement to distribute videos from MTV Networks to sites across the Internet, is trying to cement similar deals with other television networks.

Google’s goal is to forge relationships with all of the TV networks and studios, said David Eun, the Internet company’s VP of content partnerships.

“Over the next two quarters we want to get more content owners to do deals similar to MTV,” Mr. Eun said in an interview with TelevisionWeek at the company’s Mountain View, Calif., headquarters. He said Google is in talks with all the major network groups that appreciate the potential of video syndication.

The syndication initiative at Google has the potential to make videos-and video advertising-as ubiquitous on the Web as text ads. The company may be on the cusp of the next great advertising gold rush on the Web, setting off new competition with software behemoth Microsoft and upstarts such as video distributor Brightcove.

The rush by those companies to distribute video across the Web and create new advertising opportunities on third parties’ Internet sites stems from the enormity of the potential market.

Research firm eMarketer reported last week that online video ad spending will increase more than 71 percent this year, making it the fastest-growing segment of the $16.7 billion Internet advertising market. Internet video ad revenue will nearly triple this year to $640 million, up from $225 million last year, eMarketer said. By 2010 that figure may swell to $2.3 billion.

Online video is still plagued by growing pains, including difficulties in searching for clips and herky-jerky playback on many services, including Google Video. Until Web companies solve those problems, advertisers may delay spending in the medium, slowing its growth.

The reach of Google’s current advertising syndication system, AdSense, along with the company’s focus on staying ahead technologically, may give it an advantage as other companies try to tap that gusher of ad dollars. Still, the nature of the Web creates opportunities that newcomers can exploit, said Gordon Borrell, president of media research firm Borrell Associates.

“Just like Google came out of nowhere, I think there will be some player that people don’t know with Web-based programming, and it will play to the unique advantage of what the Web can do,” Mr. Borrell said.

Google’s video syndication strategy builds on AdSense, which created a new category of advertising by placing text ads next to relevant content on Web sites that join the company’s network. When Internet surfers click on those ads, Google gets paid. Video syndication again positions the company to get a cut of a new breed of advertising.

Obstacles confronting Google, the most-used Web search engine, include competition from Microsoft and nimble technology firms such as Brightcove, which also syndicates video. In addition, Google will need to strike deals with the content providers who create the most desirable product.

Microsoft, the world’s biggest software company, is hot on the syndication trail. The company is planning to integrate a video ad platform from its MSN service with its adCenter technology, which can place ads across all of Microsoft’s Web properties, said Rob Bennett, general manager of entertainment and video services for Microsoft’s MSN.

MSN already distributes its video player and places ads on about 1,100 Web sites that house Associated Press content.

There’s also Internet TV start-up Brightcove, which for 10 months has distributed video content from both niche producers and big players like Reuters to Web sites seeking targeted content, said Jeremy Allaire, the company’s CEO.

“You’ll see some additional major network, entertainment and studio brands launching in syndication with us this fall,” he said. “The trend as a whole will be transformative- it will help open up the vast amounts of content that are out there and get it out to millions of Web sites.”

Many Opportunities

The opportunities for reaping revenue from Web video are deep and wide, said T.S. Kelly, VP and director of research and insight for Media Contacts, the interactive arm of media agency MPG. That means that while Google’s video ad strategy may succeed much like its text ad strategy, other companies can cash in.

Online video syndication will expand revenue possibilities on the Internet by solving one of the biggest problems with online video today-that demand for advertising opportunities outstrips supply, Microsoft’s Mr. Bennett said.

Currently, larger sites have the resources to sell ads, but smaller ones often do not. Just as the MSN-AP ad partnership lets MSN put its advertisers onto more Web sites, the Google-MTV deal brings video and ads to sites that lack the wherewithal to strike deals with MTV on their own.

Yahoo, the second-most-used Web search engine, declined to comment on whether it has a video syndication strategy in the works. The company is working internally and with partners on new ad formats that are appropriate for both users and advertisers, a Yahoo spokesman said.

Google’s video distribution product may quiet critics who had questioned the company’s strategy after it stumbled on copyright concerns and user complaints about the Google Video homepage. Those critiques missed the point, said Hunter Walk, business product manager for Google Video.

“We have always seen Google Video as a platform to not only be a destination site but to help spread video across the Web,” he said.

Google is also extending its video reach in other ways. The company experimented with General Motors’ Pontiac brand this summer to deliver “click to play” ads within the AdSense network.

Google has since expanded that capability to other advertisers. Those ads will be available on partner sites, said Gokul Rajaram, product manager for Google AdSense.