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Google Puts Ads In YouTube Videos

Google is selling overlay advertising on a limited number of YouTube videos to a select group of partners at a cost of $20 per 1,000 viewers.

Google has begun recouping its $1.6 billion purchase of YouTube 2 cents at a time.

Google is selling overlay advertising on a limited number of YouTube videos to a select group of partners at a cost of $20 per 1,000 viewers. Initial advertisers include BMW, Ford Models, and Warner Music Group.

The overlay ads appear 15 seconds into certain YouTube videos in a strip on the bottom fifth of the image frame, unless ad-blocking software is active. They last for 15 to 20 seconds.

Clicking on the overlay pauses video playback and opens a new Flash window atop the video window to play an expanded interactive video ad. The initial overlays and click-through windows can be removed by clicking a close button in the upper right-hand corner of the graphic.

The Warner Music Group ad, for example, opens a Flash-based album browser that lets the viewer scroll through albums by Warner artists. Clicking on a given album will open a new browser window with additional information about the album and artist, provided pop-up blocking is disabled.

Google decided to use overlay ads because users didn't respond well to pre-roll ads, which play for a set period of time before the requested video begins. The abandonment rate was higher than Google was willing to accept, a company spokesperson said. In contrast, the number of overlays closed by users was less than 10%.

Social video ad network VideoEgg, which on its Web site proclaims, "We invented the video overlay ad about a year ago," said much the same thing about pre-roll ads back in November. "Pre-roll ads simply aggravate users and are generally ignored," Troy Young, chief marketing officer of VideoEgg, said at the time.

Google sees the overlay format as more flexible than traditional 15- or 30-second ads and believes that advertisers will welcome the freedom to create a far more varied set of commercials that play once the viewer has clicked through the initial overlay.

Advertisers will be able to aim their ads at specific programming genres (i.e.: sports), demographics (age and sex), locations, and times of day. Some of that information is provided voluntarily by YouTube users.

Google also said Wednesday that it has added video news clips to the U.S. version of Google News, the company's free Internet news aggregation service. Initially, the clips will come from CBS, Reuters, and several local Hearst TV stations. The company expects to add more video news providers to Google News and to offer the service in other regions in the months ahead.

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