Last week Google announced it was to sell video advertising in an attempt to monetise YouTube.
Successful monetisation is the Holy Grail of user generated content and Google are past masters at pulling it off.
I realise the incomprehensibility of that last statement so let me explain.
How do you make money from websites that are free to use? Sell advertising space is the obvious answer. But by doing so you run the risk of alienating the sites users, damaging its popularity and risk losing the very reason brands would want to advertise on it.
Worse than that, if your users are uploading free content that draws in the crowds, they will object to you making money off the back of their creations.
Often of course, these creations are not even the users' own. Google text ads often appear next to pirated content on YouTube, which can really annoy their rightful owners, especially if they happen to be a Hollywood studio or record label.
But, after extensive trials, Google reckon they have the right solution to claw back the $1.6 billion it paid for YouTube last year and make the site profitable.
Called InVideo, clips from content creators that have signed up for the scheme will show overlay ads on the bottom of the viewing screen. Clicking on the overlay will launch a commercial video ad, pausing the original clip, which resumes after the ad has finishes.
The overlays are dismissible translucent boxes that appear after fifteen seconds in the lower 20 per cent of a YouTube video screen.
Google will remunerate the content creators by giving them a split of the revenue generated by the ads placed over their clips. Meanwhile, the majority of YouTube clips, uploaded by you and me, will remain free of overlays.
Sounds like a perfect solution that won't annoy users - right?
But should brands be tempted by this new form of online advertising?
Any site that has 130 million users has got to be of interest to advertisers, no matter what market sector they are in. The pay-per-click (PPC) model for video advertising will be even more attractive than simply paying for an expensive time slot on national TV.
However, advertisers might want to consider what really draws 130 million people to YouTube every day?
Are they after professionally produced high quality content and don't mind giving eyeball time to ads for the privilege of seeing it, or is it more 'Mintos and Coke' human experiments they are after?
Take a look at the 'Most Viewed' list on YouTube's home page and you'll find quality content isn't that popular. Teenagers lip-syncing to rap songs and kittens playing the piano are.
These clips will not be subject to monetisation as yet. But it can't be long before Google feels confident enough to roll out InVideo across the entire site and really cash in on its massive archive of user generated content.
* Chris is head of digital at WAA (waa.co.uk). Email chris.tomlinson@waa.co.uk
