YouTube lets advertisers buy search terms

This screenshot shows how Sponsored Videos will appear on a YouTube search result.

(Credit: YouTube)

SAN BRUNO, Calif.--YouTube on Wednesday said it's rolling out a new ad platform called Sponsored Videos.

According to YouTube, which held a press conference at its headquarters, Sponsored Videos lets users promote their videos by bidding on keywords. Here's how it works: First, YouTube users, whether individuals or corporations, decide which of the videos they've uploaded they want to promote through site search. Then they decide which keywords they want to target.

Google, YouTube's parent company, has created automated tools that help users place bids for the keywords in an automated online auction, as well as set spending budgets. When people use keywords in search terms for videos, YouTube will display relevant videos alongside the search results. If you're, say, a Hollywood film studio, maybe you bid on the words "movie trailer."

Wow. Selling keywords on YouTube's search. What a great idea!

It only represents the single most important concept in online advertising, and it's the inspiration on which Google built an advertising dynasty. So why has it taken so long for YouTube to adopt a similar strategy?

The Web's largest video site has been casting about for a way to cash in on its 80 million users. Google CEO Eric Schmidt has said several times this year that YouTube was not generating the kind of revenue the company hoped it would. Wouldn't creating an Adsense-like offering on YouTube have been one of the first things Google did after purchasing YouTube for $1.65 billion two years ago?

As one reporter asked YouTube executives: "Wasn't this a no-brainer?"

It's not as easy as it looks, according to Matthew Liu, a YouTube product manager.

"You're absolutely right," Liu told reporters. "In hindsight, it is a natural transition for YouTube to make. We've been working on this for months. The key was, we wanted to make sure we got it right. There are a lot of intricacies involved. YouTube is a video discovery platform. We've been integrating with Google AdWords for some time, and now we're at a place where it can be win and win."

Sponsored Videos, labeled as such when they appear following a keyword search, are priced on a cost-per-click basis. Currently, only U.S. users can bid on video keywords.

So how much could this be worth to Google? It's hard to say, at this point, whether Sponsored Videos will be the answer to YouTube's revenue problems, but consider that the site recently surpassed Yahoo to become the No. 2 Web search provider, behind Google.

To squeeze more money out of YouTube, Google has launched other ad formats, such as posting links near videos, enabling visitors to purchase goods found in the clip. Google has also worked to repair its reputation in Hollywood and has recently signed deals that will bring full-length TV and film content to the site.

Google shares closed trading on Wednesday at $291, down more than 6 percent. This was the first time the stock fell below $300 in three years.

[Someone-else]

Soooo..

Google finally decided to make some money(or maybe lose less money) with Youtube.

[ryanwadeDOTcom]

WOW ... big game changer for online advertisers.

Excited to see where this one goes!

Thanks for the info!

[Vegaman_Dan]

You know, I automatically ignore the sponsored results on Google as those results are marred by bein commercial and not relevant to my search. I don't see YouTube being any different, but then again I don't use YouTube either so I'm not exactly a target demographic.

[anda612]

Use flash video mx pro to convert your video to Flash then upload to YouTube:
http://www.download.com/Flash-Video-MX-Pro/3000-2194_4-10457308.html?tag=mncol&cdlPid=10877100

[anda612]

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[SankarDatti]

Great....Now few advertisers who are using Google adwords might start to place ads in youtube as videos... Let whether which could be better for the advertisers to get good ROI and Conversion rate.

[anda612]

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[MusikTubesDOTcom]

Making Money is fine, getting rich is okay, but getting so rich that you can rule the world is crasy.

Why is Google getting richer and richer every day? Because Google says "jump" and the world "jumps". Google says buy my words, and the world buys words.... isn't this stupid? Are we all stupid?

If you buy words, yes you must be.

Bob
Webmaster of http://www.Musiktubes.com
See thousands of Musik Tubes

[MusikTubesDOTcom]

Making Money is fine, getting rich is okay, but getting so rich that you can rule the world is crasy.

Why is Google getting richer and richer every day? Because Google says "jump" and the world "jumps". Google says buy my words, and the world buys words.... isn't this stupid? Are we all stupid?

If you buy words, yes you must be.

Bob
Webmaster of http://www.Musiktubes.com
See thousands of Musik Tubes

[bulletholes]

THEY STILL DON'T GET IT!!!!

This is completely counterintuitive to why people enjoy Youtube. So now when I search a popular keyword like 'funny baby' I am going to get either a 30second ad post by a baby brand or some contrived/premium content created that is supposedly 'relevant' to what I am looking for instead of what's the most popular and organically entertaining. Amazing they can't stick to what they've created and keep giving in to the demands of advertisers... I know the pay is good, but won't be forever until you Innovate, innovate please