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.

screenshot1.jpegThe 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.

screenshot2.jpegWhen 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.