Advertising dollars are the fuel of the Internet but in some segments like online videos, the process of attracting it seems like something from Frankenstein’s lab.  Nobody yet knows the exact chemistry it will take to balance audience acceptance (or tolerance) for advertising against advertiser required metrics for measurement of return on investment. By best guess, the answer could be a combination of existing tools, or even a business model not yet invented. It’s a crapshoot. Tea Leaves and gambles.

Google (GOOG) with its huge share of search and video traffic (YouTube) has a vested interest in figuring out the how to make it work. Unlike all but a few companies, Google also has the kind of cash and technical expertise to take on the science project without limitation. They can afford to fail, repeatedly, then try again until they get it right. 

The latest experiment from Mountain View, according to the New York Times, will launch in September. Best characterized as one part content distribution channel and one part advertising test bed – Google will distribute cartoon shorts from “Family Guy” creator Seth McFarlane through the AdSense network.

Called “Seth McFarlane’s Cavalcade of Cartoon Comedy,” the project will feature approximately 50 two minute (or less) episodes. They’ll feature new characters specifically created for the Internet and will be distributed exclusively online. Production costs aren’t being spared despite the Internet-only medium. The programs are getting the full Hollywood treatment.

The episodes, McFarlane told the Times, will be “animated versions of the one frame cartoons you might see in the New Yorker, only edgier.” They’ll follow the bent, comic stylings made famous with Family Guy but without the limitations of broadcast TV content controls. FCC oversight for language or objectionable content won’t be an issue.

The advertising mixed with the webisodes will include a mix of pre-roll ads (shown prior to the video), sponsorship banners (skinning a video player, or as “provided by” introductions) and possibly onscreen overlays.

AdSense will act as a syndication agent. Through the network, Google will be able to distribute the videos for play on thousands of websites. It will be the first time, other than a Real Estate ad experiment, that Google uses the Content Network for this purpose.

Mouse clicks on the syndicated programs (including the initial click to begin playing the video stream) will trigger audience measurement and incur a pay per click [PPC] charge for the advertisers.

Media Rights Capital [MRC], which is a partner in the deal, will sell the Ad inventory, according to reports. The income will be split four ways. McFarlane, Google, MRC and the website that generated the click will all receive a share.  

The ad split and the rate card have not been disclosed. It is expected that advertisers will pay a much higher rate than a straight AdSense video buy. They may also have the option of buying custom created content that incorporates their product into McFarlane animated elements.

While the relationship is widely being reported as a new deal (articles are running from the Wall Street Journal Blogs to Information Week), it appears to have stemmed from a prior relationship that was first announced in August 2007. At that time, a similar (or the same?) AdSense video distribution deal was revealed with many terms then undisclosed. The August report did, however, include all of the current parties along with Raven-Symone Pearman, the star of Disney’s (DIS) “That’s So Raven.” 

Reported at the time, MRC was also going to front several million dollars to handle content development and production costs.

The new Cavalcade project, which Google is billing as a major release from the “Google Content Network,” appears to be one and the same as the prior project, minus Raven-Symone. By several accounts, MRC is funding production of the animated work at the same kind of budget level.

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Seth Gilbert

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