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Google's YouTube: Ads Showing On A Video Near You

Since Google bought YouTube last fall it's attracted a ton of eyeballs--51 million users in June alone--but not so much revenue. Google is just now starting to roll out its new ads to try to capitalize on YouTube's loyal audience. Here's how it works. Hit play on a YouTube video, and an ad will pop up in the lower fifth of the screen. After about ten seconds it'll go away or you can click to close it. But if you choose to click on the ad when it's running, it'll pause the video you're watching, and open up a full ad, and when it's done playing it'll take you back to the video. Check out the sample.

You won't find these ads on homemade videos of pet tricks or teenagers' stunts. Google doesn't want to risk pairing advertisers with inappropriate content, and the company also wants to avoid slapping an ad on anything that could potentially violate copyright laws.

For now, the ads are only airing on videos from one of Google's 1,000 or so content partners. Google says it's signed up about 50 content patners--including Warner Music Group and Time Warner's New Line Cinema, and Ford Models. Google will split the ad revenue with the content partners, and it will charge advertisers $20 per 1,000 times a video is shown.

But Google still has its share of challenges. It has to make sure that these ads don't turn off YouTube's loyal users, who are used to getting all the video they want without any interruptions. And then there's the issue of advertisers: apparently advertisers need to create new ads for each of the "channels" or platforms their ads play on. YouTube's appeal to advertisers is its ability to show such a broad range of content, but that will only play well if they can match ads to the right videos.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.