Two years after being acquired by Google, YouTube still hasn't figured out how to monetize the site. "We believe the best products are coming out this year. And they're new products. They're not announced. They're not just putting in-line ads in the things that people are trying. But we have a number — and, of course, Google is an innovative place," said Eric Schmidt in August.
One of the new products replicates Google's search ads and adjusts them to a video site. "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. Then, when people use YouTube to search for videos, YouTube will display the most relevant, compelling videos alongside the search results," explains YouTube Blog. Any company or YouTube user from the US can promote his channel or one his videos next to the search results.
Since YouTube controls the search results and hosts the videos, it can provide more measurable results. YouTube can track if the user watched the entire video, if he subscribed to the channel or clicked on the link to the advertiser's homepage.
Another part of YouTube's monetization strategy is expanding the in-video ads to embeddable players. "To date, YouTube has only run ads against partner videos on YouTube itself, and with people viewing millions of embedded YouTube videos every day, this meant that partners were not generating revenue from their views outside YouTube.com. But now, YouTube partners will be able to capitalize on their popularity across the internet and generate revenue from their content no matter where their video lives," informs AdSense Blog. Until now, many YouTube partners disabled the option to embed videos because they couldn't make money from this distribution channel. This change will only affect 4% of the videos uploaded to YouTube, but the percentage of views is much more significant.
The text ads displayed at the bottom of the video can be minimized, but they could cover an important part of a video (for example: annotations, captions) and they're distracting. Most of them link to web pages, but there are some ads that open a new video inside the player.
Google needs to make YouTube profitable and it's nice to see that the ads are often relevant, they don't interrupt videos and they don't make you wait.