YouTube has begun displaying semitransparent "overlay" ads at the bottom of selected video clips. The ad disappears after about 10 seconds if the viewer does nothing; the featured clip automatically pauses if the viewer clicks on the overlay ad. Shiva Rajaraman, product manager for YouTube, said internal tests show more than 70% of people give up when they see a pre-roll, an ad video before the actual video, while less than 10% decide to close an overlay by clicking the x button in the corner.
The overlay format also gives advertisers more flexibility, he said, because once the viewer chooses to watch, there is no 15 or 30 second video limit. YouTube already has been showing display ads, but video ads look to be far more lucrative. Marketers can target their ads by user demographics, location, time of day or genre. They won't be able to buy ads by keywords, though, the way Google allows merchants to purchase text ads triggered by a user's search terms. Unlike Google's pay-per-click search ads, advertisers will be charged $20 per thousand viewers, regardless of whether the user clicks on the overlay. Revenues will be split with the video owner, although officials won't say how. The video owner can decline all ads or selected ones, such as those from competitors.
News source: CNN