Google on Wednesday unveiled a new graphic ad format that will allow advertisers to create interactive ads within widgets that can be spread virally across the Internet.

The Internet giant’s new technology can be used to create a variety of ads that can be distributed across Google’s web sites, as well as a network of Google-affiliated sites.

Google has already signed up a group of large advertisers to create their own “gadgets,” the company’s term for widgets. The gadgets can include video, images, constantly updated data feeds, and mini versions of entire web sites.

Some of the features are similar to the dynamic interactive ads that Google has recently released on YouTube videos. (See YouTube's New Video-Ad Standard.)

Google’s new ads will help the company tap into the increasingly viral manner in which audio, video and data content is being distributed across the Internet. The growing use of RSS feeds and widgets—which enable Internet users to embed small content windows on third-party pages—means that companies no longer exclusively control the content that appears on their websites.

This shift has created problems—and new opportunities—for advertisers and websites. Observers have speculated on how social networks MySpace and Facebook would generate revenues from their widget-cluttered personal profile pages. Photobucket in April got under MySpace’s skin—before MySpace bought it—when the photo-sharing company released a Spiderman ad inside a MySpace widget.

On the other hand, advertising and web services companies like NewsGator, AdMission and ShopLocal have been developing advertising-supported widgets for clients.

Google’s new ad technology could attract deep-pocketed advertisers that favor graphic and rich media ads to text ads, a format for which the Internet giant is best known.
 

“For Google it answers the question of how they are going to create more interest among brand advertisers—the larger spenders who are looking for more display and rich media,” said Andrew Frank, Gartner analyst.
 

While graphical widget ads are not unique in the industry—Microsoft, Yahoo, and Adobe are working on similar ideas—none of those competitors currently have this level of product, Mr. Frank said. The platform, which incorporates the use of YouTube video, iGoogle, and AdSense is impressive on a technology level, Mr. Frank added.

Advertisers can embed PayPal or Google Checkout online payments function into Google’s ad gadgets, which would let customers buy products and service through the widgets.

The only piece that is currently missing is a contextual targeting tool for the personalized serving of graphical ads of the sort that Google would get if and when its deal to acquire DoubleClick closes, Mr. Frank said.

Advertisers that have already tried Google’s new ad gadgets include Honda, Intel, Nissan, Pepsi’s Sierra Mist, and Viacom’s Paramount Vantage. One Intel ad lets users play the game “Pong” using an Intel laptop.

In another example, Google’s interactive ad gadget lets users view various parts of the inside of a Nissan car, as well as enter a zip code to get a real-time traffic map. (See examples here.)

The new Google ads can be placed on iGoogle personalized homepages as well as Google’s network of affiliate sites. This is the kind of viral marketing that advertisers have been salivating over.