Will YouTube Mobile's display ads benefit users, or just Google?

By Dan Butcher

August 20, 2008

YouToo, Google?

Google claims its test of display ads on select pages of YouTube Mobile will improve user experience. But industry executives are skeptical.

Some industry executives believe that this initiative is purely an attempt, on the part of Google, to monetize its user-generated video content.

“At YouTube, we are constantly testing new ways to deliver the kinds of ads that contribute to the user experience while making the most sense for advertisers, and we’ve learned a lot about what works for YouTube and what doesn’t,” said Christine Tsai, product marketing manager for YouTube, in a post on the Google Mobile Team blog.

“We’re excited to explore new approaches to mobile advertising and will evaluate this test closely over the next several weeks to make sure we provide our community, our partners and advertisers with the most valuable and effective mobile experience possible,” she said.

“YouTube for mobile continues to grow exponentially, and today, people watch hundreds of millions of YouTube videos every month on mobile devices,” she said.

Don't trust anyone over 29

Google started running the test Monday, Aug. 18.

Narrowcast yourself
This move represents the first dabble in mobile advertising for YouTube.

The YouTube Mobile ads will be targeted according to the contents of the video. In other words, they will be contextual, just as YouTube owner Google's AdWords and AdSense ads are.

Adoption option

While some people who left comments on Google's blog post expressed skepticism about ads contributing to the mobile experience, YouTube does represent a powerful brand name that has the potential to innovate mobile marketing techniques.

“This one announcement isn’t earth shattering, but it does indicate that innovation in mobile and online video is underway,” said Shar VanBoskirk, principal analyst for Forrester Research Inc., Cambridge, MA.

“I expect more similar developments to unfold over the next five years that will gradually help marketers—and end users—to better leverage both mobile and online video," she said.

One of the biggest obstacles to mobile advertising has been data plan restrictions, device restrictions and carrier restrictions.

The user experience is heavily dependent on the functionality of the consumer's particular handset.

YouTube’s mobile Web site at http://m.youtube.com has dedicated applications optimized for iPhone and the Helio Ocean phones.

YouTube also has a Java application that is compatible with mobile devices such as the Sony Ericsson K800 and W880 and the Nokia E65, N95, N73, 6110 Navigator and 6120 Classic models.

Response to the ads on YouTube Mobile will be worth watching.

“I’ve poked around the new m.youtube.com ads and they are display ads, not pre-roll or post-roll video ads,” said Dave Sloan, director of product marketing for Avot Media, Sunnyvale, CA.

“This seems non-intrusive, which is a good user experience, but is anyone really going to click away from their video?” he said.

Branding, or landing?
Because YouTube’s content is based on a free, user-generated model, there is some question as to the attractiveness of the platform to advertisers who typically prefer a moderated environment.

There is also much debate on whether mobile is a better venue for delivering brand impressions or driving conversion.

“Christine Tsai’s blog post touts advertising on mobile as a great branding tool, but is the point to deliver brand impressions or is there a more lucrative opportunity for conversion through click-to-buy or click-to-call?” Mr. Sloan said.

“Mobile advertising still a big mystery, there are no models that have been proven to work, but people are more engaged on a mobile device and they’re more targeted,” he said.

Mr. Sloan pegged mobile penetration nationwide at 84 percent. He said that it’s time for YouTube to consider the channel as a strategic measure (see story).

In general, mobile marketing strategies that include multiple channels are the most effective.

Advertisers should take advantage of SMS, MMS, video, email, display ads and click-to-conversion, click-to-call or click for more information, per Mr. Sloan.

Consumers have shown a willingness to view advertising for free content, but the ads must be deployed tactfully.

“You don’t want to offend people or turn them off, to ensure that stickiness mobile advertising has to be toned down,” Mr. Sloan said. “Pre-roll ads are acceptable if they’re short, but 15 seconds is not going to fly on mobile.”

Effectively monetizing free ad-supported mobile content could very well be a cash cow going forward.

“YouTube has billions of videos and billions of users, so it has volume, it has plenty of eyeballs,” Mr. Sloan said. “However, it has to prove that it’s an effective advertising medium and be able to track brands’ ROI.”

Despite—or because of—various unanswered questions, the industry is waiting to see how Google and YouTube will proceed.

“I was excited to hear about it,” Mr. Sloan said. “In general I think it’s a great idea to experiment and YouTube is in a great position to do just that.

“What they’re doing is fantastic, it’s good for the industry and it’s good for mobile video,” he said. “Let’s see if this is the future of advertising.”