Google sees growth in online video ads

Nikesh Arora, President, Global Sales Operations and Business Development for Google, speaks at the Reuters Global Media Summit in New York, December 3, 2009.

NEW YORK (Reuters) - Google Inc is banking on significant growth in online video ads as marketers become more sophisticated at targeting consumers interactively, a senior executive at the Web search giant said on Thursday.

"The one big shift in the next three to five years is going to be video advertising," Nikesh Arora, president of global sales operations and business development, said at the Reuters Global Media Summit in New York.

"If you believe there's a big consumer shift going on, the advertising dollars will have to follow," Arora said of the increasing popularity of watching video on the Web.

Google, the world's No.1 Internet search company, made a big bet on online video with its 2006 acquisition of YouTube for $1.65 billion. The company said recently that YouTube will become a profitable business in the not too distant future and Google is aggressively moving to boost the site's ability to generate ad revenue.

In the third quarter, Google said it monetized 1 billion video views a week on YouTube.

Arora said advertisers are still figuring out how to take advantage of the online video phenomenon, with many companies simply shifting ads made for TV to the Web.

"These spots do not exploit or leverage any of the values of the Internet. It's not interactive, it's just a video. I can't click on it, I can't interact with it," he said.

But he said the ad formats for online video will inevitably evolve and improve, making video a more attractive way for brands to pitch their products.

"If you believe it can be targeted and it can be interactive -- just those two features are going to change the way video advertising will be done on the Web," said Arora.