The Google Monster Is Coming

As big as Google's (Nasdaq: GOOG  ) YouTube may seem to be, it's about to get even more ubiquitous. Last night on its AdSense blog, the paid-search giant announced the debut of "video units," which will let AdSense publishers generate revenue by embedding ad-anchored YouTube players on their sites.

Not impressed? Not an aspiring webmaster? Not sure that this will alter the cybersurfing landscape? Then you just don't know Google. Check back with me in a few weeks, and we'll see how much more pervasive the YouTube consumption process has become.

Sure, you've seen more than a few non-YouTube websites take advantage of the video-sharing site's embedding feature in the past. Whether it's a sports website that wants to show the world that amazing play from the night before, or the humor hub that can't seem to get enough of silly pratfalls and newscaster blunders, YouTube gets around.

But now it's going to get around even more, thanks to the viral magic of AdSense.

Birth of a virus
When AdSense launched four years ago, it was late to the game. Yahoo! (Nasdaq: YHOO  ) had already acquired Overture, the pioneer in serving up sponsored search results next to organic winners. However, Yahoo! used the Overture pool of targeted text ads for its own sites and those of its large partners.

Google decided to level the playing field. It opened up the AdSense program to websites and bloggers of all sizes. If you run a site for model-train collectors, you're now just a Google application away from setting up an automated process that will populate your site with fresh ads from online retailers, local hobby shops, and railroad-museum operators.

Because Google has lots of sponsors from its AdWords program, it's able to supply partner sites with a steady flow of contextually relevant ads. After all, Google's spiders crawl the Web better than anyone else's. Because Google knows what's on its publishers' pages, it has a great advantage in spitting out the ads that are likely to be the most appealing to that particular site's users.

How big is AdSense for Google? Well, Google's third-party partners accounted for $1.35 billion of the company's second-quarter revenue, or a hearty 35% slice of the top line. Of course, the program isn't blessed with the richest of margins. It kept just 15% of that $1.35 billion after accounting for its traffic-acquisition costs, with most of that amount going to the publishers who rebroadcast the ads.

Don't call AdSense a dud, though. It clears out ad inventory, populates the Web with "Ads by Google" units, and keeps rivals such as Yahoo! and Microsoft (Nasdaq: MSFT  ) away. The very profit that Google makes through AdSense is gravy, given the many benefits it provides the company.

Tube racing
With last night's launch of video units, AdSense publishers can now create their own players. They can choose from three different layouts, each one with nine different skins. They can single out videos to broadcast from revenue-sharing YouTube partners, or they can let Google refresh the clips based on the website's content.

As the videos play, relevant text ads are presented as overlays on the bottom one-fifth of the screen. Because the ads change every few seconds -- and are targeted to the website -- they may be even more effective than conventional AdSense blocks.

Still not impressed? Tough crowd.

See, outlets such as CNET (Nasdaq: CNET  ) and CBS's (NYSE: CBS  ) CBSSports.com are creating more original video content. Delivery specialists such as Akamai (Nasdaq: AKAM  ) and Limelight (Nasdaq: LLNW  ) are more than happy to speed up the process. Consumers expect such features in these multimedia-rich days.

Though videos have been tricky to monetize in the past, YouTube's new video units change that. No, it's not the first company to resort to sticking ads in videos. However, Google's advertiser base is huge, as is the convenience of going with text ads over more artistically challenging graphic campaigns.

YouTube is one step closer to taking over the world. And if not the world, it'll settle for your monitor.

A ride through the YouTube revenue-sharing museum:

  • Google launched its revenue-sharing platform in May.
  • It announced its intention back in January.
  • It knows this is the best way to keep its top content creators, such as Lonelygirl15, happy.

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