YouTube Unveils Two New Ad Options

  |  November 14, 2008   |  Comments

Advertisers can bid on search terms to display "sponsored" video on Google's video-sharing site.

YouTube has never suffered from a lack of videos, only a lack of advertising -- at least according to stockholders who are anxiously awaiting a profit. But the video-sharing site will soon be getting a lot more of both as parent company Google unveils its latest plan to monetize its $1.65 billion acquisition.

People who search the site will now be greeted with video advertisements similar to those produced by Google AdSense. YouTube searches now produce "sponsored" videos on the right side of the screen alongside unpaid results on the left. For instance, a search for raunchy comic Lisa Lampanelli turns up two video ads: one for the James Bond movie "Quantum of Solace," and another for the "Miss Horrorfest Contest."

Like AdSense, YouTube Sponsored Videos allows advertisers to bid on search terms. The service charges on a pay-per-click basis, with advertisers allowed to set a maximum price they are willing to pay.

The service was introduced Thursday by a post on the official YouTube blog. "Sponsored Videos is a self-serve advertising platform that will allow you to promote your video to the audience you are interested in reaching in an easy, effective, democratic, and affordable way," the post read, adding that the service was developed in response to requests from "aspiring musicians, talented performers, small business-owners and many others."

Indeed, advertisers have long clamored for a way to reach YouTube's massive audience -- it now ranks as one of the Web's top-five search engines, even though search is only a tangential function of the site. But YouTube's many advertising initiatives of late are at least as much an effort to wring some money out of Google's pricey acquisition.

It was only last year that YouTube introduced in-video advertising, a move was hailed as a significant step toward monetization. But even that has failed to address a primary concern about YouTube: The site consists mostly of amateur videos, the lion's share of which major advertisers do not want to grace with their branding. Newer video-sharing site like Hulu do not suffer from that problem because they only contain professionally produced content.

Just last week, YouTube announced a deal with MGM that would bring many of that studio's full-length features to the site, sponsored by advertising, thereby increasing the amount of professional content on the site and welcoming more ad dollars. YouTube has struck similar deals with CBS and Lionsgate and said it is hoping to do more.

In a separate announcement today, YouTube said it will now begin running overlay ads in YouTube partner videos that live on other sites. This means that no matter where a YouTube video is embedded, it can contain an ad and earn revenue for YouTube partners.

"By helping YouTube partners generate additional revenue no matter where their videos are played, we hope to encourage further content creation among our most popular and prolific video creators," wrote Arlene Lee of AdSense Publisher Support on the official Google AdSense blog.

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Douglas Quenqua is a journalist based in Brooklyn, NY who writes about culture and technology. His work has appeared in The New York Times, Wired, The New York Observer, and Fortune.

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