YouTube Formally Introduces ‘Sponsored Videos’

YouTube is formally announcing “sponsored videos.” This is an evolution and expansion of what was has been informally running under the heading “promoted videos.” The effort seeks to marry Google AdWords-like bidding and targeting with YouTube video content. Accordingly, it’s an auction marketplace but somewhat simplified vs. AdWords. And while there apparently will be a view from AdWords of sponsored videos the two marketplaces are largely separate — for now.

It’s a smart move for Google/YouTube and will enable content creators, publishers, marketers and even individuals to get their content in front of audiences searching on YouTube. Now that the program is formally rolling out it has an “obvious” quality — in retrospect. Indeed, what took YouTube so long? They told me that they were waiting until they got the experience right.

Sponsored videos can showcase individual videos or entire channels. You notice after performing several searches that there really isn’t a ton of video ad “inventory.” In some cases YouTube still shows AdWords text ads where there are no sponsored videos. But over time, as marketers and publishers discover the program, the “inventory” will rise and become more relevant.

While I kept asking and challenging YouTube spokesman Matthew Liu about the differences between consumer behavior on Google and YouTube, he also made the point that sponsored videos aren’t just about commercial queries or advertisers; they’re also a way to get targeted exposure on YouTube for your content (of any kind). Getting visibility on YouTube is increasingly difficult amid the oceans of clips and shows now on the site. A publisher, content producer or individual may simply want to gain notice for a video regardless of whether there’s any commercial dimension or anything to buy.

Here are some examples:

All videos in the program must live on YouTube — they must be uploaded to YouTube and have an existence on YouTube separate from their participation in sponsored videos — so they’re subject to user reviews, etc. Sponsored videos also see the benefit of YouTube Insights, the analytics program that shows queries, metrics and datapoints associated with videos and channels and the audiences who viewed them.

One secondary possibility that was interesting to me about the program is how it might be used for “AB testing” of video content or commercials that could then appear elsewhere on the Internet or on conventional television.

All sponsored videos are CPC based and not sold on a CPM basis. So if Google is going to make any significant revenue off the program it will need to sign up thousands of advertisers and content producers who’ll be willing to pay to gain exposure for their ads or content. The more directly relevant the videos to the search queries, the more likely the CTRs — just like on Google.

My sense is that this will happen and the advertisers will come. So perhaps, finally, Google has found a more successful way to monetize its prized video destination.

For related discussion, see Techmeme.