Project Spaghetti: YouTube might introduce pre-roll ads

Written on July 9, 2008 – 5:19 pm
Ernst-Jan Pfauth, editor in chief

Wall Street Journal has an important web story today, as they’ve found two sources willing to talk a bit about YouTube’s advertisement plans. YouTube only makes $200 million a year with advertising. Yes, “only”, as you might expect a video service with over a billion video views each day to come up with a little more ad revenue. This gets the executives at Google a bit nervous, as they still have to justify the 1.65 billion acquisition. Therefor, they’re thinking of drastic measures - like pre-roll ads all over the place.

One of the - unfortunately anonymous - sources said that a review executed by Google North America advertising president Tim Armstrong had identified an impressive number of 105 problems within the ad-selling division. This review is part of Project Spaghetti, a nickname for the extensive evaluation of the YouTube advertisement plan that will end before or during Q3. Although Armstrong seems worried about offending the audience of YouTube, he WILL adopt pre- and post-rolls. At least, that’s what the secret sources say.

This probably will alienate some of the YouTube users, but most people will just take it for granted. There are ads on TV too.. And this group gets more important, as they’ll become more profitable for Google. So the increasing revenues will make up for the few thousand people that find a different video home.

[Via paidcontent.org]

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advertisement, business model, google, pre-roll ads, The Wall Street Journal, youtube

About the author: Ernst-Jan is a blogger and journalist, who previously worked in New York to cover news at the United Nations. Next to writing, he's also a singer in the band Christina Five.

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2 comments/trackbacks to “Project Spaghetti: YouTube might introduce pre-roll ads”

Jul 13, 2008: VideoPlaza: right place and time for a video ad overlay service
[...] Earlier this week, the Wall Street Journal got two anonymous sources talking about YouTube’s failing advertisement strategy. The video giant generates 10 billion video views a day, but ‘only’ manages to make $200 million a year from advertising. Thus the Google-owned company might introduce pre and post-roll ads, said the sources to WSJ. [...]

By Martin on Jul 10, 2008

Lesson learned — I will not open a video hosting service. I’d rather pocket those millions than try to break even on bandwidth costs.

No real feeling on pre/post roll advertising, as long as I get an Adsense cut I suppose. Otherwise I will have to host videos’ myself (and hope that they don’t become popular).

[Reply]