Google Gadgets are now an AdSense unit

Webmasters will soon be able to auction off widget space on their sites and blogs managed and marketed by advertising powerhouse Google. Advertisers will produce a Google Gadget in standard IAB unit sizes for distribution across the Google network at CPC or CPM billing rates. Google will bolster its current Google Analytics package to support better tracking paid and free widget campaigns in this sub-page and asynchronous pageload environment. The Google Gadget advertising beta program was publicly announced during a marketing summit for the automotive industry according to Online Media Daily.

By the end of 2007 Google will offer its traditional text link advertising, display advertising, and interactive gadgets to its huge network of advertisers. AdSense publishers can select the interactive marketing unit that best suits their need, and the Google bidding system can select the most profitable ad content. The advertising content can behave like a miniature application, integrating tabs, updating its content on-the-fly using web feeds and other data protocols, and creating small interactive experiences across the web. Google Gadget advertisements will benefit from the same contextual analysis, click-through rate, and other measures of interactivity and success already measured by the Google system.

Pretty cool stuff, and it will be interesting to see what type of CPM might be commanded from a 300 x 250 pixel widget as an advertising vehicle. The new advertising system should be a huge boost to widget-producing design studios as big brands will be much more aware of this potential advertising spend.

Google is not the only company thinking about widgets as a paid advertising model. Startups such as Widgetbox and Clearspring feature widget analytics, directories, and plans for future advertising revenue. The 800-pound gorilla just entered the room, the same giant powering advertisements on widget-friendly MySpace for at least the next three years. The widget industry just shook a bit, and expect more announcements from Google’s gadget program in the next few months.