Mountain View, California-based Internet search leader Google plans to make increased profitability at its  YouTube video-sharing Web site the top priority during the rest of 2008, brought about by new advertising techniques for the service, Google chief executive Eric Schmidt said Thursday as the company held its annual shareholder meeting at its headquarters. Schmidt and Google co-founders Larry Page and Sergey Brin told reporters gathered for the event their thoughts about Microsoft and Yahoo in the wake of Microsoft's withdrawal of its takeover bid for Yahoo on Saturday. YouTube Plans Include Changes To Ads While Video Plays Google, which purchased YouTube for $1.65 billion in 2006, plans to use new advertising methods to increase the revenue derived from the popular video site, methods that will 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 recently. The new YouTube ad system has not moved into a testing stage yet, however Schmidt said Google expects to begin implementing the new strategy "over the next couple of months." 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 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," Brin said Thursday. Google Leaders Discuss YouTube, Yahoo Plans At Annual Talks 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. 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. In August Google brought video overlay ads to YouTube, which served as a test for an expanded program unveiled in February which saw Google broaden its online advertising service to include two types of display ads for viewing within Web videos, with the introduction of its AdSense for Video project. The new YouTube ads will differ from the these earlier programs. "The experience of the viewer is paramount," Google has said of its pursuit for the best way to display ads while users view YouTube video. Top Google Executives Field Yahoo Questions The top three Google executives fielded questions about the search leader's two week search advertising test with Yahoo that concluded recently, seen by some analysts as having helped fend off Microsoft's bid for  Yahoo. Last month Schmidt publicly expressed his fondness for Yahoo, saying, "It’s nice to be working with Yahoo. We like them very much." Those feelings were echoed Thursday as he spoke of the test with Yahoo. "We have had a brilliant test. We like them very much," and Schmidt also noted, "We view the test as successful. That's a good basis to talk to Yahoo some more." Google and Yahoo team members worked well together during the test, Brin said. "We had a really good dynamic. We were able to implement it quickly. The technology teams got along well. They were able to get the protocols working very easily and able to gain a lot of insights," Brin added of the trial run. Neither Schmidt nor the two Google founders had any announcement about a possible future expanded partnership with Yahoo, although Brin noted, "We’re very excited to work with them." Analysts on Wall Street have suggested a search advertising partnership with Yahoo could bring Google as much as $1 billion annually. Related Links:
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