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Internet search engine giant Google's popular YouTube video sharing Web site has begun offering certain large partners and content producers the option to sell advertising within their own branded channels on the site while splitting revenue with the Google-owned service, according to YouTube product manager Shiva Rajaraman. Part Of Google's Effort To Make More From Top Video Property The ability to sell advertising has been offered to the biggest video production companies in the YouTube Partner Program, which are the most likely to have their own ad sales infrastructure in place, in an effort to  help Google make more money from its wildly popular YouTube property. YouTube introduced its partner program in December 2007. In 2006 Google purchased YouTube, the world's largest video sharing Web site, for $1.65 billion in stock compensation, and has since sought to make money from the acquisition. In August 2007 Google brought video overlay ads to YouTube, allowing Web site owners to display advertising in a small area of any YouTube content that has been embedded in site, which offered a potential increase in advertising revenue through greater numbers of people clicking the video ads, however the ads in that program were chosen by YouTube. By allowing some YouTube Partner Program members the ability to control what ads users see when viewing their content, by letting such partners sell their own ads, Google hopes to attract more professional content creators and producers who may previously have had concerns about the relevance of the ads YouTube chose to run alongside their content. Online Video Spending Expected To Jump Of the $20 billion spent each year on Internet advertising in the United States, only a relatively small amount is presently used to buy Web video ads, with the large majority of Google's 2007 $16.6 billion ad sale revenue coming from sales of small text-based ads shown alongside search results and on its ad network. Of the $7.3 billion spent in the U.S. last quarter on Web advertising, nearly a quarter came from Google, according to a recent study by market research group IDC. By 2011 overall online video spending is expected to jump from $1.4 billion this year to $4.3 billion, according to research by eMarketer. Since purchasing YouTube its popularity has increased dramatically, with the number of monthly visitors globally increasing to 269 million in February, an 84 percent increase from one year earlier, according to data from Reston, Virginia-based Web traffic analysis firm comScore. New Formats To Crack Video Advertising Nut The new YouTube ad program, which applies to the area near the bottom of videos with click-to-expand  overlays and to Web pages hosting the video player, has been released in a trial format, according to Rajaraman. "We'll be trying new formats, new ways to engage users," he is quoted as saying in a recent Ad Age report by Abbey Klaassen. "No one knows quite how to crack video advertising yet," added Rajaraman, who helps YouTube design and launch new advertising formats and programs such as InVideo video overlay ads. During April the top video-stream brand in the United States was YouTube, with 4,052,984 total streams, well ahead of second place Fox Interactive Media, which saw 328 million streams, and Yahoo with 221 million, according to data from Web traffic analysis firm Nielsen Online. Over the past two years Google has expanded its advertising ambitions to include such traditional media as radio, television and newspapers, along with several new ad formats for mobile devices and the Web, but has yet to see any of them bring in strong revenue, according to the firm's most recent annual report. Google's AdWords for TV program sells advertising on satellite and cable television, and in February the search giant expanded its AdSense for Video project. Top Google Executives Hinted At Program Last month Google said it planned to make increased profitability at YouTube the top priority during the rest of 2008, which it aimed to bring about through new advertising techniques, according to Google chief executive Eric Schmidt, who spoke during the company's annual shareholder meeting at its headquarters. Google said then that it planned to use new advertising methods to increase the revenue derived from the popular video site, methods that would differ from previous ad systems that display commercial messages before or after video segments, Schmidt said. "We have new ad products that are not pre-roll and post-roll," Schmidt was reported to have said at a conference in California. "Think of them as ads that use the page around YouTube in interesting ways," he added. Finding an ad system for YouTube that still allows users to enjoy the experience of watching online video has been a challenge for Google that has yet to find a "breakthrough" solution, Schmidt said. "We're working but have not yet in my view gotten a breakthrough around monetization," Schmidt told a CNBC interviewer in May. YouTube and online advertising company DoubleClick, which Google purchased for $3.1 billion in March, still represent only a small portion of the company's immense search and advertising business revenue, however Google is looking ahead to future gains from both, said Google co-founder Sergey Brin. "They both have potential, but for it to be a sizable part of our revenue, you're going to have to wait at least a couple of years," said Brin. YouTube's Biggest Video Producers To Sell Own Advertising The program allowing major partners and content producers to sell their own ads is likely to be a part of the  plan Schmidt and Brin mentioned last month. Rajaraman said the program would help YouTube Partner Program members. "They're really interested in packaging together all their distribution potential, including YouTube, and using that to surround their anchor and tell a story just like our sales force would sell on our platform," Rajaraman told Ad Age. "So we've started to work with these partners that do have that capability, essentially enabling them to sell their own inventory on YouTube," he added. While other video sharing companies such as Blip.tv and Viddler already give video content producers the ability to sell their own ads, the addition of such a program at YouTube is likely to please some producers that have been hesitant to enter the online video market. Related Links:
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