• by Laurie Sullivan  @lauriesullivan, April 16, 2009

Google has integrated AdSense for Video with Content ID, allowing media companies to generate revenue from copyrighted video content that users create and upload to YouTube.

The Content ID's Claimed Content feature, which first identifies the content, adds a lower-third overlay ad to the videos. Previously, media partners could only add traditional banners and display ads.

The "claimed" videos through Content ID allow media companies to generate higher revenue, according to Phil Farhi, YouTube product manager. The AdSense feature is available to use on content across the company's entire pool of videos. That means hundreds of millions of video views monthly in the U.S.

YouTube has had the ability to generate revenue through banner and display ads, but Farhi said the ability to match ads with video content will improve earnings from each clip. The contextual ads appear in the video as the viewer watches. "We've seen users interact with these ads, and we've seen higher click-through rates," he said.

Having the technology that knows the type of ads to place on the videos without human intervention will help the company and its media partners make more money from each clip. Claiming the user-uploaded versions through Content ID allows media partners to double the inventory from which they can generate funds.

Farhi said today that YouTube matches the ad to the content on the page, but the company has begun to experiment with matching ads to browser history and viewer interests. The data comes from cookies stores. If a viewer browses car-related videos from General Motors, BMW or Mercedes in YouTube, for example, the system will likely serve up car related ads.

Credit Suisse analysts Spencer Wang and Kenneth Sena projected YouTube will serve 75 billion video streams in 2009, up 38% compared with last year. And while Google's site leads in online video with 41% share of total domestic video streams, monetization remains challenging, according to a report published by the firm's analysts.

Analysis of YouTube traffic and ad strategies released in the report suggest that Google's video site is on track to generate about $240 million in revenue in 2009, up about 20% from the prior year.

On the other hand, bandwidth, content licensing, ad-revenue shares, hardware storage, sales and marketing and other costs will total about $711 million and will have YouTube seeing red, the Credit Suisse report suggests. YouTube could generate an EBIT (Earnings Before Interest and Tax) loss of approximately $470 million this year, as the analysts believe YouTube is monetizing less than 3% of its video inventory.