Written by Chris Albrecht
Posted Wednesday, July 9, 2008 at 8:28 AM PT

YouTube Reversing Stand Against Pre-Rolls

In an exhaustive story on Google’s troubles monetizing YouTube, The Wall Street Journal discovered that the company is considering a plan to implement the dreaded pre- and post-roll advertisements, something the company has shunned since the beginning.

It’s a major reversal for the company. Last year, when we talked to then-head of YouTube monetization Shashi Seth he said:

“Pre-rolls and post-rolls did not perform well on our platform. [In our testing,] 75 percent of our users were unhappy with them.”

Seth quit earlier this year; perhaps it was a sign of protest over the impending switch to the hated ad format?

Whatever the reason, the company is under the gun to generate significant revenue and the WSJ reports that money from YouTube ads will most likely hit just $200 million this year (looks like Forbes was right). At a recent talk, Chad Hurley said YouTube is also looking to affiliate sales for revenue. But advertisers like the pre-roll format, and in a crunch time like this, the company will go with what works.

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Topic: Money & Power

Comments (7)

Youtube monetization is a total mess.

Pierre Col - UbicMedia — 9:10 AM on July 9, 2008 Reply
A Marketing Sherpa report said that 70% of people abandoned pre roll ads. Youtube backs up those numbers. So why in the world would you move forward with preroll? Anyone can answer that?

Jim Kukral — 9:24 AM on July 9, 2008 Reply
@Jim Where were the ads? I’d abandon a two minute news clip because of a 30-second pre-roll, but would probably have no problem sitting through a 7-second ad in front of a two minute clip produced by The Onion.

Ben Homer — 10:10 AM on July 9, 2008 Reply
“75% of our viewers weren’t happy with them”… but 100% of our advertisers were.

Sam — 10:16 AM on July 9, 2008 Reply
There’s a couple reasons Google would be willing to include pre- or post rolls. One is they’re trying to gravitate more to people viewing videos on the TV platform, which has socialized people for decades to put up with commercials.

The second reason, although Google would never admit it, is they’re probably tired of the freeloaders using the site without offering anything back.

If there isn’t a significant way to monetize the site, pressure will eventually come from shareholders to do it or get rid of the property. U.S. law requires a public company to make decisions based on what’s best for the shareholders, and executives must respond accordingly.

Assuming they aren’t able to figure out a way to do it, pressure similar to what’s being put on Time Warner concerning AOL is inevitable; especially if the Google stock ends up dropping in another big way.

As far as the users of YouTube go, putting up pre-rolls would get rid of a lot of the dead weight that sits around always wanting something for nothing.

That may even be part of the Google strategy in order to cut back on costs.

One way or the other, Google will have to monetize the site. They’ll just have to be willing to lose some viewers in exchange for that reality.

Even if they do, it makes no difference. What other online business wants people to add to their costs without a way to make money on them? Eventually the users that leave would come back, because competitors would make a similar move in order to offset costs. It’s called running a business.

Gary Bourgeault — 3:11 PM on July 9, 2008 Reply
thanks for the news

hot hatches — 7:37 AM on September 25, 2008 Reply
Pre-roll ads make me shun the company that used them for a long time.

screw youtube, I guess if it’s too good to be true is usually is.

Don — 8:29 AM on November 4, 2009 Reply

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