WebProNews

Google's finally settled on a way to monetize YouTube, announcing they will be inserting ad overlays at the bottom of media partner videos. With pre-sale bandwidth bill reported to be $1 million per month and a pending Viacom behemoth of a lawsuit, the monetization strategy comes none too soon.

The video ads run as a banner overlay on the bottom 20 percent of the videos, are semi-transparent and interactive. It's hard to understand what exactly what that means without actually seeing it, but an ad for the movie remake "Hairspray" on this hairstyling instructional video shows that it is much like the in-program trailers that pop up during prime-time TV shows.

The ads appear 15 seconds into the video, giving viewers a chance to settle into the content. Viewers can ignore the banner, or click on it, which will interrupt the current video and play a trailer for the movie. Viewers can click to exit if they change their mind.

So the level of user-control is fairly great, and, in theory, less intrusive. There's even an ad indicator, a little bar in the time scroll, that warns the viewer there's an ad on the way.

The videos only appear on YouTube media partner videos, and Google charges advertisers $20 for every 1,000 displays. The revenue is split between media partners and Google.

Doing it this way also allows a certain level of control for Google and its advertisers. Google can prevent ads from appearing on unauthorized copyrighted content – which will serve as a nice weapon in court with Viacom as evidence of a good faith effort to prevent profiting from copyright infringement – and advertisers can prevent their brands appearing on objectionable content.

Like television, Google will be able to offer advertisers day-parts and specific channels, as well as demographic and geographic information.

At the advent of online video success, the debate on what type of ads would be successful focused mostly on whether they were pre-, mid-, or post-roll ads, appearing before, during, or after the content.

Each format had its own problems; mid-roll ads were intrusive; pre-roll ads had a 70% abandonment rate; and post-roll videos were almost universally ignored.

Tests of YouTube's new video ad format however, enjoyed click-through rates five to ten times those of more traditional display ads, and 75 percent of the viewers return to watching the video afterward.