Google seems to have internal rationalizations working to convince themselves that they are not delivering "annoying", untargeted video ads with their new AdSense based video ad program.
In yesterday's analyst call, Jonathan Rosenberg, SVP of Products at Google, spent a lot of time rationalizing the Video ad experiment.
Proclaiming most other "Brand X" video ads "annoying", he emphasized the "static image" that users must click on to start playing the ads. He mentioned that feature several times in succession and his overall answer was much less confident than his usual short and to the point replies to advertising related questions. A lot more "ums", "ahs" and "uhs" sputtered out as he struggled to justify the relevancy.
He was pressed about how the ads are actually targeted - and the answer is pretty enlightening: - video ads are sold on a CPM basis in the auction so the advertiser is incented to bid on sites that the advertisers believe are relevant!
In other words, video ads are nothing like text ads, where Google determines what is relevant. Video ads are simply site-targeted CPM ads. Obviously, that is a lot less targeted then Google wants.
The fact is, they haven't figured out the model, but they know they need to, so that is why the video experiment is starting even though it's fundamentally against Google's belief in delivering relevant ads.
PS: Eric Schmidt chimed in, with a quick spin summary of the rationalizations:
Of course, all of these were not as self-delusional as Eric's big spiel that competitors such as Microsoft entering the market is good for Google - i.e. the online ad market is growing, so it's not a zero-sum game, competitors validate the market, and more companies move to online spending so keyword prices could just keep going higher, blah, blah, blah. That all may be somewhat true in the expanding market, but it's scary rationalization and it makes you realize that Schmidt has no experience in a declining advertising market...
So just keep telling yourselves all that, guys.
The rest of the call was interesting, but John Battelle already posted a summary list that pretty well covers it. It was interesting that the analysts generally ask the kind of questions that the Google-holic blogosphere, SEOs and SEMs are interested in. I do think the analysts are way too deferential to Google, but I think that's the price of access.
Update: Henry Blodget weighs in with a blog post title that's freakin' brilliant: Real Message of Google Analyst Call: We Care.