Google's announcement that it is going to carry display advertising on YouTube, the site it bought for $1.65 billion in October 2006, may have given rise to a few smirks in the ad industry, given the search engine's historical attitude towards display ads and media agencies.
In the past, it has written off display formats at the expense of new search technology, and its relationship with media agencies took a dive last year when it replaced traditional commission payments with its unpopular Best Practice Funding scheme.
It's not surprising that Google has had to take display seriously considering the premium it paid for the site. The introduction of the new formats on YouTube, last week in the US and over the coming months in the UK, will involve what Google terms "non-intrusive" overlays that cover 20 per cent of the screen and disappear after ten seconds if not engaged by the user. But regardless of its history with display advertising, how innovative has Google really been?
Google has looked for a solution that goes beyond "pre-roll" ads attached to each downloaded clip. The ads can also be targeted, to some degree, by audience and subject matter.
However, its sceptics remain unconvinced. They argue that rivals such as Brightcove and Video Egg are already running similar formats and have yet to be sold on the results of Google's trial, which claim that the format offers five to ten times more success than the click-to-play rates of classic digital ad formats such as banners.
There is also the view that the ad format could alienate YouTube's audience. Jamie Galloway, the director of digital media at COI, says: "I think that some users might find it a step too far in terms of YouTube hijacking their content. So they may see a fall off in the number of people who upload. A 20 per cent overlay is not insignificant."
He adds: "COI has used YouTube to promote the RAF through the 'Afghan Diaries'. Would we just do the overlay on top? Probably not. Some clients will and some won't."
Marco Bertozzi, the head of digital at ZenithOptimedia, agrees that YouTube may lose some of its younger audience, although he is hedging his bets that the model will be improved over time. "I will be surprised if this is the last format that Google will try," he says. "It will get loads of feedback from its users and adapt. There is such a broad range of consumers going on YouTube - at one end, the mid-30s market is probably more ad-friendly and realistic that someone's got to pay for this. At the other end of the scale, the 14-year-olds who put their skateboarding videos on it will probably think its getting in the way of what could be very good content and might start thinking about looking at another site. But the site's got such critical mass now that it's not going to be the downfall of YouTube."
Blake Chandlee, the commercial director at Yahoo! is convinced there are alternative ways of generating revenue around online content: "I support any kind of ad format that allows us to grow the medium and to bring relevance and a good user experience to consumers, but I don't think overlays are the only answer we're going to see.
"There's going to be a combination of formats that allow brands to connect with consumers around worldwide content. Every brand will be different and probably every consumer audience will be different."
Faith Carthy, the group managing director of i-level, is less sceptical about the results, and is impressed with what Google has done. "Initial indications seem to be very positive in terms of the levels of interactivity they are getting," she says.
"It's good because the content producers have to opt in and agree in terms of the revenue share. It's contextually relevant where it does appear, it will disappear where the user hasn't engaged with it. That will happen automatically, so it's not interruptive and it seems to have greater engagement than pre-roll on the evidence so far."
NO - Jamie Galloway, director of digital media, COI
"For me, it is all about the user. They generate the content and they come to view your content. I think there are other ways of creating revenue without reducing the user experience."
MAYBE - Marco Bertozzi, head of digital, ZenithOptimedia
"Advertisers will choose it because it's a route to difficult consumers. It won't alienate people because it isn't a full screen and consumers can choose to watch it. More time is needed to analyse the data."
MAYBE - Blake Chandlee, commercial director, Yahoo!
"It's a good step in the right direction. It's in the market and we'll be launching our own version in the next six weeks, so we believe in it (the overlay format). But I don't believe it's the silver bullet that people are making it out to be today."
YES - Faith Carthy, group managing director, i-level
"I think it's to be welcomed because the way they've approached it has challenged the notion that there's only pre- or post-roll ads. It makes full use of the interactivity that only digital can provide."
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