YouTube Extend Advertising into Video Clips

When Google bought social, non-commercial YouTube, all the financial analysts were puzzling about how they where going to make money from the £832 million purchase. Well, that conundrum may have been answered - in part at least - with the latest announcement from the internet giant; ads are to be incorporated into some of the videos posted on the site.

YouTube are hoping that their innovative approach will be as unobtrusive as their current online classifieds, placed directly by owner Google. A transparent advertisement overlay will begin 20 seconds into selected video clips, displayed in the bottom fifth of the video. If the advert is ignored it disappears after 15 seconds, however clicking on the image will play the advert. Mindful of the uproar of many YouTube users following the announcement of its acquisition by the search engine giant, Eileen Naughton, YouTube's director for media platforms said: "We are trying to be respectful to the YouTube community, whilst also working with our marketing partners. Our research has shown that less than 10 per cent of users choose to close the image overlay as soon as it appears." Evidence, Naughton claims, that the majority of YouTube's users are not unduly bothered by this latest form of advertising.

The research also showed that the traditional forms of TV advertising were not popular. Internet viewers do not appreciate a pre-roll commercial, where an advertising clip is played before the content that they have clicked to see, nor did they like an interruption to their viewing once it had started. Shashi Seth, group product manager for YouTube explains their need for a new approach: "Our experiments with pre-roll advertising showed a very high abandonment rate."

Google will be charging advertisers $20 per 1,000 page views for the service that will be rolled-out first in the USA. They are anxious to ensure that big brand names do not appear alongside inappropriate content such as pornographic or violent content and therefore avoid the embarrassment suffered by Facebook recently when brand names pulled their advertising due to it appearing on the British National Party page.

Initially, they will only be using established media partners, such as Warner Music and In addition only YouTube's 1,000 content "partners", including Chelsea Football Club and the BBC's commercial unit will in advertise by this method, which is due to roll out in the UK within months.

However, whether YouTube's new advertising approach will prove as unobtrusive as the online classifieds featured on the website remains to be seen. Indeed, if it is not visible enough, then some would question the commercial benefit for their marketing partners, including the advertisers themselves. But, on the other hand if it takes off then it will provide the default model for all video advertising, and also add significant revenues to video-sharing websites.