YouTube may be dominating the Web video world in traffic - hugely so - but it hasn’t yet been made into the moneymaking heavyweight its parent company, Google, wishes it to be.
That may be changing, say Quentin Hardy and Evan Hessel of Forbes.com. Though the company - or, more specifically, its proprietor, Google, isn’t one to share numbers as to the its precise revenue stream, the site is purportedly en route to bag $200 million in revenue by the end of the year, and may increased that figure by 75% or more in 2009. That would amount to $350 million. Small change? According to Google’s overall annual returns, yes. Still, as Google’s chief executive, Eric Schmidt has said in weeks past, one of the company’s primary focuses now is to tap much more heavily the advertising potential of the video site. And the area it undoubtedly recognizes as more financially effective today than any other is premium content laced with in-video advertisements. 
(eMarketer says industry wide spending on Web video advertisement will reach $1.35bn this year. Google serves a rough 38% of video streams, no other site taking north of 4%, according to comScore. Do the math. Room to grow its bank account? Absolutely.)
So far, however, YouTube hasn’t been met with gratifying critiques of its efforts to present marketing spots within clips, so it cannot satisfy its want and need to make more dough. My own assessment of the reasoning for the collectively negative response given to in-video advertisements is that the size of the distraction relative to the video itself is simply too imposing. The video window is small in and of itself. To diminish the viewing area with an ad overlaid on the bottom third of the clip, regardless of its transparency, is to cause frustration on the part of the viewer. If YouTube were to expand the default dimensions of its window whilst maintaining general site performance, viewers would likely be more accepting of such marketing efforts. What’s more, if Google so chose, premium content providers (television studios and podcasters) could arrange to have pre-roll, mid-roll, and/or post-roll video advertisements shown within the confines of custom pages created for their YouTube based video catalogues, increasing considerably Google’s per-playback net return.
Google is reported to have closely analyzed responses to its in-video advertisements and had found that banner ads displayed in the bottommost portion of the video window proved the most popular of the variety trialled (or least unpopular, depending on one’s perspective), with pre-rolls being the least promising. I’m one to suspect that antipathy for pre-rolls is conditional on both the type and technical quality of content delivered to viewers. If, say, a full 22-minute sitcom from CBS were to be laced with a couple of 15-second advertisements, a la Hulu, and presented in window generously sized, viewers might show to be surprisingly accepting.
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