Written by Liz Gannes
Posted Tuesday, August 21, 2007 at 6:01 PM PT

YouTube Rolls Out In-Video Ads

YouTube is unveiling today the deployment of animated Flash ads that are included in select videos and are being sold on a $20 CPM (cost per thousand impressions) basis.

The ads have been in tests for months now; we had first sighted them in May.

Across “millions and millions of tests,” the ads have performed “5 times to 10 times vs. traditional display advertising” said Shashi Seth, YouTube group product manager (we had mentioned the name before when Google deployed him to YouTube to head up monetization products at the beginning of this year). Though YouTube isn’t charging on a performance basis, 75 percent of tested viewers who clicked on an ad took it to its conclusion, according to Seth.

With all that testing done, YouTube is being extremely precise and careful about the implementation of the ads. Ads will show up no earlier than 15 seconds into a video, will be overlayed on the bottom 20 percent of a video with 80 percent transparency. If a viewer doesn’t respond after 10 seconds, the overlay minimizes into a small icon. Ads can expand into either overlaid video commercials or interactive Flash environments — for example as a library of Warner Music Group albums layered on top of a WMG video.

The ads will only be shown on videos made by YouTube’s 2,000 to 3,000 professional content partners and the 70-odd members of YouTube’s member partner program. Content partners will share in revenue, though Seth would not disclose the splits, saying they vary. “It’s safe to say the partners benefit to the larger extent with these advertising deals,” he offered.

When asked what kind of ad formats did not test well with the YouTube audience, Seth replied emphatically: “Pre-rolls and post-rolls did not perform well on our platform. [In our testing,] 75 percent of our users were unhappy with them.”

With a distinctly un-Google-like lack of precision, the in-video ads (which will apparently all sell for the same $20 CPM) will be targeted based on only four factors: location, demographics, time of day, and genre of video.

“There’s obviously a lot more opportunity,” said Seth. “We’ll be making it more and more precise as time goes by.” He noted that some 40 percent of YouTube users are logged into registered accounts at any one time, so demographic targeting can be fairly specific.

YouTube will be providing advertisers with metrics about impressions, click-throughs, percentage of video watched, comments, and subscribers.

See examples here, here, here, and here.

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Topic: Money & Power

Comments (6)

If only they shared a bit of the profits with the creators of these videos.

jeremy — 10:11 AM on August 22, 2007 Reply
Comments like those from Shashi Seth, a YouTube group product manager, illustrate to me that Google/YouTube doesn’t get it. As quoted in AdWeek:

“(T)hanks to YouTube’s high volume of video views per day, users will rarely see ads, Seth said. ‘We’re hoping it will be infrequent enough they won’t notice.’”

Ads infrequent enough that users won’t notice? Gee, that should send brands and agencies running to spend their ad dollars on YouTube. Seriously, why even run the ads if your stated goal is to run them as infrequently as possible? It’s a bad market differentiator.

In fact, it seems Google/YouTube has missed the point. The recent Online Publishers Association and Piper Jaffray studies found over 50% of online video consumers willing to be served ads in exchange for viewing free content. The key is to get content that is relevant to what the consumer is watching or searching for—OPA found 56% of consumers polled wanted contextual, relevant, video ads. So the key for most consumers is not frequency, it is context.

The YouTube ad model will have difficulty being contextually focused when its ads only cover a few market parameters sex and age; geography; time of day; and video genre. I am surprised Google is going live with such a rough product offering. ScanScout’s contextual engine not only has a two year head-start and proven functionality, ScanScout has three-way, metadata, speech, and visual recognition, tagging and filtering system. ScanScout already matches contextually relevant ads with all types of video media, including UGC video media with brand protecting parameters set by individual brands and advertisers.

achartwell — 11:12 AM on August 22, 2007 Reply
jeremy, YouTube is splitting revenues with the creators, it just wouldn’t disclose the split.

Liz Gannes, NewTeeVee — 12:09 PM on August 22, 2007 Reply
achartwell, I think YouTube still has the freedom not to be focused on revenue. It still hasn’t answered questions about how to monetize run-of-the-mill UGC, but at least now they are going to be able to pitch in for their massive bandwidth bills.

Liz Gannes, NewTeeVee — 12:21 PM on August 22, 2007 Reply
It’s great news for everyone selling online video overlay ads that Youtube/Google has embraced the format. They are the only players who have the scale and the relationships to turn it into a standard, which is good for everyone who sells the unit. More at the Lightspeed blog at http://lsvp.wordpress.com/2007/08/23/youtubes-entry-into-online-video-overlay-will-be-good-for-its-competitors/

jeremyliew — 10:53 AM on August 23, 2007 Reply
Google will compete with YouTube soon by rolling out their own video Adwords ads.

Best YouTube Videos — 2:19 PM on December 13, 2007 Reply

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