YouTube Selling More Ads To Larger Advertisers — But Only On A Fraction Of Videos

YouTube may finally be making some headway in convincing big marketers to get over their phobia of user-generated content. A new report from Piper Jaffray analyst Gene Munster says YouTube is selling in-stream advertising on more videos and adding new major advertisers. The report surveyed the top 100 videos (by views) on YouTube during a single week in February with an eye toward how many played ads and what kind of ads ran. Munster found that:

— 72 percent of the ads displayed were in-video ads versus 52 percent in January and 63 percent in December.

— New major advertisers on the site added included Verizon (NYSE: VZ), Adidas, Xbox, Disney (NYSE: DIS), Kraft, and Chevy.

— YouTube will start charging people to download some of its videos.

— 12 percent of the top 100 videos, including ones featuring Mercedes-Benz and Microsoft’s Halo, were branded promotional videos.

— 29 percent of videos had an ad versus 25 percent in January and 30 percent in December

In-video ads are higher quality (and have higher CPMs) than so-called run-of-network cost-per-click ads, so more in-video ads represents progress for the company. Still, YouTube sells ads on only a fraction of its videos — YouTube itself hasn’t said publicly what that percentage is, but the common speculation is about 25 percent — and so it still has a long way to go to turn itself into an ad-revenue-generating machine.

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