YouTube Introduces Video Advertising

NEW YORK, August 22: YouTube today introduced video advertising on the site, opting for “overlays” as opposed to pre-rolls where ads are featured at the beginning of a clip.

The overlay ad appears at the bottom of a clip 15 seconds after the video begins and disappears within 10 seconds if the user doesn’t click on it. The user can also opt to close the ad. If the user clicks on the campaign, the video clip they were watching automatically pauses and the full ad appears.

“What we have come up with is a user-controlled ad format that is engaging,” said Eileen Naughton, Google’s director for media platforms, in the New York Times. “We want our users to be able to accept and choose what type of advertising they engage in.”

Shiva Rajaraman, the product manager for YouTube, told the AP that based on internal research, more than 70 percent of people give up when they see a pre-roll. By contrast, less than 10 percent decide to close an overlay.

Initial video advertisers on YouTube include 20th Century Fox and New Line Cinema; about 50 companies have signed up for the new service, Reuters indicates. The clips that advertising will be featured in have all been legally licensed to the Google-owned site; no ads will appear in user-generated content. Revenues from video advertising on YouTube will be shared with the content owners. Advertisers will be charged $20 for every 1,000 times the ad is displayed.

Web and TV to Converge in 2011

A new study from eMarketer finds TV and web video may converge in 2011, reports Business Week.

Video ad sales are expected to climb from $775 million this year to $3.1 billion in 2010 and then a jump to $4.3 billion in 2011. However, this still only accounts for $1 of every $10 spent on Internet advertising.

Ultimately, eMarketer believes over the next few years video advertising will enter a grand experimental phase. It is after 2011 that TV and web advertising will really start to converge. Among the current experiements:

Major media companies like Sony are already starting to blur lines. Recently launched Crackle touts high-quality video and has the goal of finding high-quality talent to fill the netwaves.

Yahoo is testing animated window-shade ads that users can pull down over a video and graphical ads that appear during a video in the same way TV networks show ads at the bottom during programming.

Startup VideoEgg is experimenting with overlaid graphic ads that appear within content. A good move, considering 77 percent find current video advertising, such as pre-roll, too intrusive.

Cost is also a major reason why video is growing. Startup TurnHere produces internet videos for as little as $500, pulling from a network of 2,000 independent filmmakers who can shoot for local businesses.