Man, I had a busy day today and it continues. If you've been following me along in Facebook all you've seen from me in the past few days is that I'm buried in work. Hence the reason for not being on top of this B-I-G news from YouTube.
According to this article in AdWeek YouTube Ad Plan Shuns Pre-Rolls and will overlay ads right within the video player. According to YouTube, pre-roll video shows a much larger abandonment rate (75%) than the overlay ads that they are using (10%). Basically it works by YouTube inserting a 10 second ad in the bottom 20% of the video unit that you can click on and then watch the commercial. Google said the ads got 1%-2% click rates and on average 75% of the commercial was watched. Those numbers, while I believe are true, probably over state the long term impact as the cool factor wears off. For a cool demo watch this video from fellow Internet Oldtimer and Jersey Guy Shawn Collins.
From a marketing perspective I can't wait to test these ads out and already emailed my contacts at Google. What I've always liked about pre-roll is that it forces people to watch your commercial to see the content, however this version might be less intrusive. Sort of a product placement right within the content or similar to that old "i" in TiVo that could let you request more information from an advertiser (I don't know anyone that's done that). The CPMs seem a little high right now ($20), but low enough to give them a try. Plus, you get short branding even if the user doesn't click on the ad. I'm sure over time, we'll see this incorporated into Google's AdWords platform so you can select based on genre, demographics, and URL.
However, I think this will probably upset a lot of hard core YouTube users. I think they were probably bracing for some short pre or post-roll, but the ad placements right within their content might be seen as intrusive. I really can't tell you how I feel because I'm not a hard core user. I upload videos there, but all of them are personal so I could care less. The big upside is to get a share of the CPMs which should ease the pain this causes users.
Of course Google had to do something a little different even if they borrowed the format from other video hosting sites. As long as the user base can learn to tolerate the ad insertions, I'm sure YouTube will start churning out the ad dollars.