Here are some points to consider:
Google is defintely covering all bases when it comes to new forms of media. I'm not too sure how Google Video's community works, but hands down, YouTube has a more "virally active" crowd. YouTube is the video quivalent of viral blogging. It would be nice to dip their hands into this huge user community.
Contextual advertising will still be text based. I don't know how you can actually embed a keyword into a video, but you can have a video about Paris Hilton and respective keywords for something completely different - and Google may treat this as the latter.
Definitely, Google needs to partner not just with YouTube. The video community is merely a medium to spread the infectuous seeds of campaigns. Which is why Google partnered with a couple of labels too.
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