YouTube Shuns Pre-Roll Video Advertising

NEW YORK YouTube has sketched out its plan to fully introduce advertising to its fast-growing video site.

For now, the company has rejected interruptive video ads, but will allow marketers to build “brand channels” similar to MySpace profile pages. YouTube’s 30 million users can opt to subscribe to such channels, which will host video and serve as platforms for advertisers to solicit feedback and contributions from consumers. The site has also begun selling what it calls “participatory video ads” (user-initiated spots that run on its home page).

“We think there are better ways for people to engage with brands than forcing them to watch a commercial before seeing content,” said Chad Hurley, YouTube’s CEO. “You could ask anyone on the Net if they enjoy that experience and they’d probably say no.”

In the last two weeks, YouTube has run such spots for a handful of clients, including Fox, which promoted its Prison Break series. A promotion for Dimension Films’ Pulse drew over 900,000 views. Like all YouTube clips, users can post comments and share the video content.

The first brand channel on YouTube is part of Warner Bros. Records’ promotion for Paris Hilton’s debut album. The initiative features behind-the-scenes footage of the making of Hilton’s music video. The channel is sponsored by Fox, which is also running ads for Prison Break there.

Banner and text ads will complement the video spots and brand channels.

YouTube executives have expressed concerns in the past over turning to pre-roll video ads, which play before a viewer sees content. These are widely used by competing video sites such as AOL, MSN and Yahoo. Instead, YouTube is taking a page from MySpace’s book by giving users a measure of choice and providing social media tools that could, in theory, create a dialog between advertisers and consumers.

“Pre-roll ads interrupt the experience on our site,” Hurley said. “We wanted to create a model where our users can engage with content and create a two-way communication between advertisers and users.”

Many advertisers have enjoyed success by seeding YouTube with commercials or viral videos. A Nike clip of Brazilian star Ronaldhino performing soccer ball tricks is among the site’s most watched of all time. Volkswagen clips have also been top draws. This month, Smirnoff created a YouTube hit with its “Tea Partay” video of preppie rappers, which has already been viewed over 730,000 times.

Hurley said advertisers are still welcome to seed the site with their own content. “It’s hard to gain visibility even if you have a great piece of content,” he said. “What we provide is visibility from the beginning.”

The video ads will be sold at a daily rate, rather than performance pricing tied to the number of views they receive.

YouTube has experienced dramatic growth since its founding in February 2005. In July, it drew 30.5 million visitors, according to Nielsen//NetRatings, up 56 percent from the previous month.