Google Inc. is now planning to launch a new service that will place video commercials on the hundreds of thousands of Web sites - Google Adsense publishers - where Google sells advertising. This step is the latest in Google's move to move beyond static text ads. The move will put Google squarely into competition with television networks as advertisers are more than willing to shell out for online commercials. That is because large advertisers have now come to realise that a large number of their target audience spends more time on the Web than anything else.

Designed to be a non-intrusive product, the videos Adsense ads will first appear as static ads in television-screen like boxes. The video starts rolling only when the consumer clicks on the screen unlike video ads that normally jump off pages and start on their own. Consumers will have the option to start or ignore an ad, but they will not be able to stop or pause, adjust the volume or click through to the advertiser's site. The duration of the commercials will be up to two minutes.

According to reports, Google will introduce the ads this week. Initially, the video ads will be available to Adwords advertisers in the US, Canada and Japan. Later, Google will roll them out in other territories. Google will host video ads on its own servers instead of making customers deal with a third-party supplier, unlike other video advertisers.

Google will not place video ads next to search results - on its own site or elsewhere, for now. It will distribute them to those sites which make use of Google's context-sensitive text and image ads to earn revenues - the Adsense publishers . Most of the companies that sell video ads place them as part as part of a stream of programming rather than on Web pages where users have to click to watch the video. That is largely because most advertisers do not think that consumers will be motivated enough to click on videos to watch it.

Google, however, seems to have other plans apart from pure advertising. According to reports, Google will also allow advertisers to use the system to test the impact of their commercials before they run them on television. That way advertisers will be able to figure out if their advertisements work or not.

Google wants to rope in small businesses for very targeted advertising. Then again, there are advertisers who will benefit most from video ads, such as movie studios and real estate agents who can showcase their products best using videos.

Unlike other sites, Google will not negotiate prices with individual advertisers. Rather, it will use its automated auction system in Adwords where there will be a single auction for graphical, text, and video ads. Advertisers will be able to bid a fixed fee to display the ad to 1,000 users (CPM video ads) or as a price for each time a user clicks on the ad to visit their site (CPC video ads). Advertisers will have to bid more than the combined cost of two or four text ads that can be placed on the screen in the same area that the video ad will occupy.

Advertisers will be able to place ads on sites they choose or on pages related to specific keywords. The prices that advertisers pay to display their video ads will work out to less than $20 than what other sites that offer video ads charge.

Google is looking at video ads to provide a fillip to sales growth on AdSense. Many advertisers feel that returns on buying AdSense text ads is lower. Google is looking at diversifying revenues by using video ads. Google also made a foray into radio advertising recently by buying DMark Broadcasting, a company that sells radio advertising.

The online video advertising market is worth over $225 million and is expected to triple by next year. As of now Yahoo! and Microsoft sell video ads on their sites. Recently, AOL acquired Lighteningcast, a company that places video ads on nearly 150 sites.