YouTube Ads Could Be a Boon, Blip for Google

08/27/07 - 06:27 AM EDT

Vishesh Kumar

While having the potential to be a powerful way to connect with customers, this second type of ad would be a riskier expense on television.

The ads are being run on a trial basis, and BMW is currently not paying for them, Harris says. But the company is keeping a close eye on the results, and the new format so far "seems like a fantastic opportunity to find new, emerging ways to connect proactively with consumers," Kelly says.

Along with advertising in a way that's not possible on TV and at a fraction of the cost, other elements are likely to lure television ad dollars to online video ads.

The 18-to-35 male demographic -- much coveted by advertisers -- is spending more time online and less time watching TV.

Additionally, the spread of digital video-recorders means that a growing number of television viewers can fast-forward through commercials -- a move not applicable online.

Google's latest move, in other words, may be more meaningful on several fronts than believed on the Street.

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