What MTV says about Google-YouTube marriage

"Amped-up" AdSense could be the way the search giant turns its $1.65 billion acquisition into something more than a headline-grabbing deal.

A recent Google collaboration with MTV Networks may have offered a window into what the combination of Google's online advertising network and YouTube's content will look like.

Google in August, in what Jennifer Feikin, Google's director of video and multimedia search partnerships, said at the time was the first, but not the last, syndication deal of its kind.

"It's an amped-up form of AdSense," Feikin said. "We really have high hopes for this test, and we will look to roll the model out to other content providers."

"There are certain types of advertisers that will not be willing to put their commercial in front of YouTube content."
--Emily Reilly, JupiterResearch analyst

While the search giant is staying mum about how exactly it plans to make money off the massive index of videos it's acquiring with YouTube, Google watchers are taking a hard look at the video projects Google has already tackled to gain insight into its plans. At stake, some argue, is the future of online video. If Google, with its wildly successful ad network, can find a way to "monetize" YouTube's viewership, it will point the way for other big Net video companies.

But if the Google-YouTube combo doesn't pan out, that failure could cool investors' fervor for online video, while adding Google to the notorious list of big companies that spent billions to acquire "eyeballs" instead of a revenue-generating company, and got burned in the process.

"YouTube didn't put ads in front of their videos yet for several reasons--namely consumers are turned off by the idea and advertisers are wary of the content," said Emily Reilly, an analyst at JupiterResearch. "Google will have to solve those issues. What may occur instead of that is Google will use something like AdSense contextual ads that rotate through the page but with no in-screen pre-roll (before videos)."

"Advertisers don't have the ability to effectively target ads," Reilly added. "Google will have to solve that too."

For the two-month test with MTV, Google licensed content from the music network and distributed it over select AdSense Web sites, said Google spokeswoman Jennifer Hakes. The video clips had video ads inserted and were targeted to the Web site's subject matter. For example, content from MTV's Nickelodeon programming aimed at children was shown on a site dealing with baby names, she said. The ad revenue was divided between the publisher Web site, Google and MTV.

Hakes said she couldn't say whether the test would serve as a model for the combined Google-YouTube effort. "We're exploring ways to integrate" Google's ad technology and YouTube's content, she said. "We're not ruling anything out."

In another two-month test that took place this summer, Google offered Google Video users the ability to watch an ad instead of paying for some premium content. The ads were shown after the video played, in what is called "post-roll" format, and banner ads were also displayed.

Outside of those tests, Google seems to be sticking with display advertising that appears alongside the content on its Google Video site. YouTube is using display ads too, mostly out of deference to its audience, which likely would be annoyed at having to watch ads before seeing the videos, experts said.

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