YouTube Chose Overlay Ads. Should You?

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YouTube's decision to bet on the Flash overlay ad as the best way to monetize its content affects us profoundly. If rolled out across the entire array of YouTube videos, it instantly gives the site the most video inventory of any single property on the Web.

As it stands, the InVideo ads (as YouTube calls them) won't be rolled out across all videos yet but across select content providers. This current batch of providers are assumed to have professional-quality content, making this a baby step toward a full rollout.

Overlay ads have been around for almost two years, with numerous properties and networks having implemented them with high degrees of success. These include VideoEgg, Blip.tv, Break.com, ScanScout, and others. My agency has been working with them as long as the option has been available, and we've learned a lot.

If you've been using video to advertise on the Web and have primarily been using pre-roll advertising, should you make the switch? Are pre-roll ads antiquated? Is this the next big thing in online video advertising?

The answers to those questions vary.

If you've been using pre-roll advertising, investigate the overlay format. Note that this will require unique creative geared toward inciting a user response rather than relying on a passive view to make an impact.

While a passive view does occur in an overlay experience, ideally you want to tease content or an experience that will resonate with the viewer. "Click here for more info" may suffice (depending on the product or brand), but better would be, "Click here for an exclusive peek at..." or "Watch it now!" Your audience is already in a video-viewing mode; if they know it's an experience they can continue, they'll be more likely to interact.

Utilizing motion in these overlays is another great way to grab attention. Fox's use of these ads featured Homer dashing across the bottom of the video in an ad for "The Simpsons Movie." But don't use too much animation, it's just distracting. While distracting someone to draw attention to your ad sounds like a great idea, too much of it will just cause the viewer to stop watching -- hardly the desired effect.

Pre-roll advertising also tends to lead to aborted viewing, though it's tolerated when in front of professionally created content of known quality. Pre-roll is still a great way to get a message across, as has been the :15 and :30 formats for decades. However, advertising created for the content performs best, and the shorter the better. Frequency capping is key but should usually be the responsibility of the publisher to avoid oversaturation.

Overlay advertising will likely remain the preferred solution when it comes to monetizing the largest amount of user-generated video content (the long tail), so it's best to start testing this format now, in controlled doses, to determine what kind of messaging will be best for your brand.

Experiment now. This format won't be experimental for long.