How Will Google Monetize YouTube?

Now that the dust is settling from the news of Google acquiring YouTube, many are curious as to how Google will actually make money off the web property. Even though YouTube has existed for a couple of years, it has yet to become profitable. Will Google just throw AdSense on all the pages? Maybe place commercials before the free videos? How about charging fees for certain video content?

Jennifer Slegg has an excellent write-up providing her thoughts of what Google might do to monetize their newly acquired property. A few excerpts...

First, the obvious approach for video ads is what they have experimented with in their MTV video ad beta test - inserting paid commercials within the streaming video. These video ads were 30 seconds in length or less, done in interstitial style, meaning when you'd expect a commercial break if you were watching the programming on the television, you would see one of these video ads instead.

But the problem lies that because YouTube's videos themselves are currently ad-free, you could alienate the viewership by suddenly tacking 30 second ad spots at the beginning of every YouTube video. However, there is definitely room for advertisers to create shorter video ad spots, say 10 seconds in length, that users would be much more tolerant of.

There could also be the advertising scenario where advertisers could pick and choose on-the-fly which videos they would like their ads appearing on, meaning the vast majority of videos would remain ad-free, while only those ones "chosen" by advertisers would have ads on them.

And speaking of the content network, let's look at how the content network could benefit from this YouTube deal. The most obvious would be to allow publishers to monetize from YouTube videos they post to their blog or website.

These and many other interesting ideas are in full detail at Jennifer's blog. In summary, Jennifer believes that the "YouTube deal could really push Google's AdWords video ads to the next level, and be done in a way to allow publishers to earn money (both for placement and for creating the video) as well as allow advertisers the ability to monetize all those YouTube eyeballs."