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YouTube finally launches in video ads

I was pleased to read today on Marketing Pilgrim about YouTube premiering InVideo ads. It is at once a little surprising that they haven’t done something before now and a testimony to the problems of pre-rolls that they haven’t.  (For a long time YouTube have had display ads around their videos – I am specifically talking about in-video here.)
The way Google is approaching this is smart.  The key point is that they have made it unobtrusive and remain committed to not swamping the user with too many ads.  The most important aspects of that are that the ads will only appear after the stream has been going for 10-15s, when they arrive they will be an overlay over only the bottom 20% of the video and they will only insert ads into a small percentage of videos.

Check out Marketing Pilgrim for more screenshots and a more detailed description of how the system works.

I was pleased to read this because it is important that Google make a success of monetising YouTube and this looks like a really promising step towards that goal.  Trial results in terms of click throughs are very promising as well (although this always seems to be the case with new formats and we should hold off on making conclusions until people have gotten over their initial curiousity).

Google has a lot of inventory here, people are watching literally billions of minutes of video per month on YouTube so this could be a big deal for them.  I am generally a bit sceptical about Google’s ability to keep its momentum going and wasn’t surprised by their last earnings miss, but just maybe this could underpin their next phase of growth.

One interesting aspect of the way they have set this up is that not every video will have an ad.  That is a big departure from traditional ad funded TV which thinks of programmes and the ads withing them as a single unit.  This is more like a magazine model where some pages have ads, some don’t and the number of ads is down to editorial judgement.  The significance of this initiative will depend in large part on where that judgement line is drawn and how many ads they feel comfortable showing without fear of driving users from the site.

I hope that they are able to turn this into a big enough revenue stream that people start saying Google got YouTube at a bargain.  That will help us all as we build the next wave of companies.  At the moment Myspace is widely accepted to have been a great acquisition for News Corp, it is starting to look like maybe Ebay didn’t do so well with Skype and the jury is still out on YouTube – so things are pretty evenly balanced.  It would be great to see the great acquisitions outnumbering the less good ones by two to one.