So here is my first question… how might this work for my attorneys?  Let me tell you how it is supposed to work.  First of all, when Google bought YouTube they did not reveal any profit model that they might have had in mind, but it was obvious that that was part of the game plan. 

Well, today the New York Times reported that Google believes they have a formula that will work.  No, they will not put a ”preroll” on the video that requires the viewer to watch it prior to the video.  That just wouldn’t work for short form video and Google knows that or they would have tried it by now.  It is, however, used fairly effectively in long form video.

Instead the magic “formula” Google has in mind is to “introduce a new type of video ad,” which it said was unobtrusive and kept users in control of what they saw.  Google’s director for media platforms describes the interface as a “user controlled ad format that is engaging.”

Basically, the ads, which appear 15 seconds after a user begins watching a video clip, take the form of an overlay on the bottom fifth of the screen, not unlike the tickers that display headlines during television news programs.   The user can ignore the overlay, which will disappear after about 10 seconds, or close it.  But if the user clicks on it, the video they were watching will stop and a video ad will begin playing.  Once the ad is over, or if a user clicks on a box to close it, the original video will resume playing from the point where it was stopped.

In early tests, YouTube users clicked on overlays five to ten times more frequently than on banner ads.

 The video ad market is expected to double this year from last year to $775 million.  It has been projected to grow to $4.3 billion by 2011, according to eMarketer, a research firm.

It looks like video ads are here to stay so we, in the PI industry, need to pay attention to this so that we can investigate ways to potentially benefit from this emerging form of web advertising.

 For more information, you can contact Cindy Speaker at 610-692-3217.