With all of the fuss about the Yahoo Google advertising deal and the global economic crisis it seems that one of the more interesting stories, Google Gadget Ads, has gone almost completely unnoticed.

Google Gadget Ads [widget ads] are a new hybrid ad format employing JavaScript, XML (i.e. AJAX) and Flash video to add Web 2.0 style interactivity to their ads. They are distributed over their existing Video Ads channels already available to AdWords and AdSense customers. The same ads can also be uloaded as Gadgets to iGoogle homepages with minimal modification.

While gadgets so far have tended to be fairly straightforward reporting on things such as the weather or news, really the sky is the limit and everything from games to full blown applications – which Google calls “mini-websites” – is possible. If your familiar with the range of plugins for Facebook then you probably have the right idea.

While access to Gadget Ads is currently limited to a few big spenders, due to the complexity of the ads creation, they clearly hope to widen participation in due course and so this is one to watch given that Google already controls a sizeable chunk of world wide web advertising revenues.

Also, Google has recently started running post-view advertising on some of their more popular videos, as the site’s revenue is very low considering its incredible number of page views. Google had previously made noises about wanting to create emmbedded ads, as they are rumoured to perform well, however it’s now thought that pragmatism has forced them go for a less technically challenging solution in the interim.

Gadget Ads as Video 2.0

Clearly, however, Google has a vision, along with a plan already under way. Just as flat “brochure ware” websites were once commonplace, but now web 2.0 complete with Flash and AJAX enabled interaction is all the rage, I think that in years to come “flat video” could become passée as basic editing and hyperlinking tool are embedded into phone-cams and interactive video will be the order of the day.

Don’t get me wrong, text ads will be their bread and butter for a while yet, not least due to their speed and simplicity, however, between youtube and their AdSense network and AdWords ad management platform, not to mention Google’s new ad planner, Google are well placed to lead the new video generation and, importantly, the race to monetise it too.

As I covered in a recent post widgets are great for SEO, even as cheap techniques such as directory listings are fading, largely due to the fact that they tend too offer the webmaster valuable content (news feeds, the weather etc.) in exchange for what is essentially free advertising and hyperlink or two.

Soon it seems, thanks to Google, widgets will be great for paid search advertising too. It’s early days yet, but they have the infrastructure and the potential profits of fun, engaging ads could be huge.