YouTube Transition to Advertising

The image “” cannot be displayed, because it contains errors.YouTube has offered branded channels to broadcasters and marketers but it has yet to really monetize the site with ads, which could potentially come in the form of pre or post-roll commercials (probably 10 seconds or less). Variety reported Tuesday that at Web 2.0 Google CEO Eric Schmidt suggested commercials might come soon with a revenue share — partly to mollify copyright holders.

But there’s danger here. Recall that YouTube co-founder Chad Hurley floated the idea of pre-roll commercials previously. That prompted a Harris survey about YouTube user attitudes toward pre-roll. The results were largely negative:

Nearly three-quarters of frequent YouTube users said they would visit the site less if it started including short video ads before every clip, according to the results of a recent Harris Poll released Monday. Of those, 42% said they would visit a little less often, and 31%, a lot less often.

There was a subsequent Google statement “eschewing” pre-roll (via MediaPost):

“We don’t believe in pre-rolls,” said Penry Price, director of North American sales for Google, at an industry conference in New York. He said Google is currently testing other methods of serving video ads, including postroll ads and interstitials, but hasn’t yet settled on a monetization scheme for YouTube. “We have a long way to go in video,” he said at the AlwaysOn Media conference.

Interstitials are even more dangerous because people don’t want their content interrupted. Among the three most direct monetization options, post-roll would thus seem to be the most desirable for what is an inevitable development at YouTube. While the introduction of commercials on YouTube will undoubtedly cause some audience defection it’s not clear that any of YouTube’s major competitors would benefit because they’re all operating under the same imperatives: the need to monetize video streams.

A smart approach would probably be selective monetization, sponsorships and CPM advertising. In other words, monetize the traffic with contextual CPM ads (DoubleClick will help there), and have sponsorships in certain more commercially oriented areas or in association with contests and so on. Commercials could also be featured in selected sections or as content if they were produced partly as entertainment (e.g., BMW short films, SuperBowl commercials).

There are lots of creative options for YouTube that won’t be as disruptive as pre-roll (or to a lesser degree post-roll). Restraint needs to be exercised or there will be some audience erosion.

One Response to “YouTube Transition to Advertising”

  1. Informe: Google lanzará anuncios tradicionales “pre-rollo” en YouTube | Search Engine Land en Español Says:

    […] por la cual YouTube triunfó en el vídeo era la ausencia de anuncios, sobre todo pre-rollo. Google ha jugado con la idea de pre-rollo en el pasado. Este cambio en política y posición se puede interpretar […]

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