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YouTube Videos to Have 'Overlay'
Ads
AP
Wednesday Aug 22, 2007
NEW YORK - Video advertising is coming to YouTube, but it won't
be the type common at sites elsewhere. Starting Wednesday, the
popular video-sharing site plans to feature semitransparent "overlay"
ads at the bottom of selected video clips.
The ad disappears after about 10 seconds if the viewer does nothing;
the featured clip automatically pauses if the viewer clicks on
the overlay to launch the full pitch.
YouTube said it was trying to avoid pre-rolls that precede the
main feature at sites like Microsoft Corp. (nasdaq: MSFT - news
- people )'s MSN, which partners with The Associated Press on
a video news service.
Shiva Rajaraman, product manager for YouTube, said internal tests
show 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,
which they can exit by clicking on an "X" in a corner.
(Article continues below)
The overlay format also gives advertisers more flexibility, he
said, because they aren't constrained to keeping a video ad at
15 or 30 seconds to avoid defection. Because a viewer chooses
to watch, a video ad can run much longer - clicking on one test
overlay launched a 2-minute trailer for "The Simpsons Movie."
YouTube, which Google Inc. (nasdaq: GOOG - news - people ) bought
last year for $1.76 billion, is still trying to justify its hefty
sales price. Despite its huge audience, YouTube generated about
$15 million in revenue last year, based on figures provided in
Google's annual report.
The site already has been showing display ads, but video ads
look to be far more lucrative, particularly as they attract brand-name
advertisers already used to buying video spots on television.
Initial video advertisers on YouTube include Warner Music Group
Corp. (nyse: WMG - news - people ), News Corp. (nyse: NWS - news
- people )'s 20th Century Fox and Time Warner (nyse: TWX - news
- people ) Inc.'s New Line Cinema. They will accompany video clips
from selected partners, including Warner Music, the band Killswitch
Engage and dozens of heavy video contributors accepted into a
user-partner program.
Marketers can target their ads by user demographics, location,
time of day or genre, such as music videos or sports. They won't
be able to buy ads by keywords, though, the way Google allows
merchants to purchase text ads triggered by a user's search terms.
And unlike Google's pay-per-click search ads, advertisers will
be charged by eyeball - $20 per thousand viewers - regardless
of whether the user clicks on the overlay.
Revenues will be split with the video owner, although officials
won't say how. The video owner can decline all ads or selected
ones, such as those from competitors.
Despite differences with Google's keyword ads, which generate
the bulk of the company's revenues, officials said the two share
a common goal of being nonintrusive.
"Ads need to provide value to the user community,"
said Eileen Naughton, Google's director of media platforms. "We've
proved over and over again on Google that ads are really useful
information when users raise their hands and engage with them."
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