Adverts as sliced bread

There are two things that are interesting about the new YouTube advertising approach:

Firstly, its not that new - it's an approach that has been used by a number of players for quite a while, but suddenly the Media (including the New Media pundits) are picking up the story because it's YouTube (Update - one of the pioneers of the format, VideoEgg, is making its point of view known).

Secondly, until now its has not been seen as the potential killer method (Takeup being quite low so far - see note at bottom of page) - there are various problems, for example:

- content creators tend to hate people messing with their artistic integrity
- if you are looking for viral transfer it has problems if the ads play on others' sites
- it is more complex than simple sidebar approaches (more moving formats)

So is this now the best Ad-thing since sliced bread? The YouTube team say that it has proven to be the "least worst" ad approach:

Across “millions and millions of tests,” the ads have performed “5 times to 10 times vs. traditional display advertising” said Shashi Seth, YouTube group product manager

Clearly Google is trying to achieve some form of ROI on the acquisition of YouTube, so Something Had To be Done, and everyone was watching YouTube very closely so kudos to them for trying it out - we would expect quite a bit of iteration still, however.

The price of $20 CPM puts a datapoint on the value of Web TV ads and seems quite high by TV standards (to break even on $1.65 bn acquisition cost thats 0.83 trillion eyeballs that have to see the ads to break even ), and it will be interesting to see just how targeted it can be - no doubt initial pricing is partly a novelty effect, and we can expect gradations in the scale based on popularity over time.

What will be very interesting now is how the consensus of free UGC in exchange for free viewing will now play out, however - in Olde Media the content is usually paid for, so it will be interesting to see how the "talent" will start to extract its penny now that its clear there is some some dough to be made

Update - a new post on TechCrunch has this comment from Jeremy Allaire of Brightcove on their experiences to date (tallies with the stuff we have):

Interestingly, despite having been 18+ months “ahead of the market”, to our disappointment, there has been extremely limited uptake by the advertising community around these formats. There are a lot of factors behind this limited uptake, including:

- the advertising community buying video have been very focused on leveraging existing creative and buying patterns in the online video space
- most content publishers and media owners have been focused on getting the ‘basics’ up and running, and also responding to the RFPs from marketers and advertisers, which are almost 100% focused on basic short-form video commercials
- for premium brands and content, the basic pre-roll and companion banners are yielding extremely attractive CPMs and there is little evidence that :15 ads have any negative impact on end-user viewership behavior — in fact, our own metrics show that sites that run without any ads, and then introduce :15 pre-rolls and banners achieve identical usage and performance (e.g. no drop-off in users because of ads) on their content.

Maybe this is The New Sliced Bread......we somehow doubt it though, if it really worked the mainstream media would have used it long ago. Still, maybe we will have to eat our words....