According to a report at TechCrunch, Google Inc. (NASDAQ: GOOG) is working on programs that will drive adoption of video advertising online. CPMs, the rate that advertisers charge customers, are estimated to be over $40 for online video. This is much higher than the rate for simple banners.
Google obviously has an edge, if it can come up with a program that both advertisers and content companies will accept. Due to its ownership of YouTube and Google Video, the company has the largest audience for video content. What it still lacks is a broadly accepted program to move TV advertising to the web.
One of the issues facing Google and competitors is whether people are willing to watch ads that are much longer than 10 or 15 seconds. Longer ads clearly offer a better opportunity to explain product features, but if web visitors will not take the time, it does not matter.
The other substantial problem is where the ads go. Do they belong in the programming or in some other spot on the web page.
With display advertising growth rates slowing and text search ads reaching a level where their year-over-year numbers are likely to be less robust, the battle for internet revenue may well turn to video.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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