• by Erik Sass  @eriksass1, August 23, 2006

Popular video-sharing site YouTube Tuesday unveiled new plans for monetizing its service with ads. The company is rolling out a new ad platform that offers two main features--brand channels, where companies can create their own programming, and what YouTube is calling "participatory video ads," some of which direct users to the new brand channels.

The brand channels allow marketers to create their own programming, customize visual content with logos and other graphics, and accumulate audiences. YouTube's participatory video ads appear in the upper right-hand corner of the home page; when users click on them the video begins playing in place, next to a menu of clips posted by users.

YouTube CEO Chad Hurley said the new video ad units can serve to guide users to sponsored clips and brand channels. The upper-right-hand corner unit, he said, "gives advertisers visibility in our system without disrupting the user experience."

While YouTube captured the imagination of advertisers with free, virtually limitless posting of video clips, including ads, the company had not previously come up with a good way to direct users to such content--which could easily get lost in a sea of short video clips.

Now, advertisers can link video ads appearing on the YouTube home page to other clips on YouTube or their brand channels, and users can forward video links to friends, Hurley said, "recreating the viral nature of the site in a branded context." Users also can share clips with friends and post links on their Web sites or blogs.

Warner Bros. is one of the first record companies to use the new ad units to promote an upcoming album--in this case "Paris," the upcoming debut effort from the socialite-singer Paris Hilton. In the last month, movie studios have also used the prototype ad unit. Sony Pictures ran such ads to promote "Grudge," while MGM advertised "Material Girls," Universal Pictures promoted "Accepted," and Lions' Gate advertised "Crank."

Hurley added that YouTube hopes to bring more non-entertainment brands on board, and also wants to include sponsorship arrangements pairing their brands with popular content.

The brand channel component of YouTube's ad platform allows advertisers further flexibility, said Julie Supan, the company's director of marketing. "Some of them want a channel that uses all the imagery of their brands, very branded--but we're seeing that a lot of big automotive and credit card companies want to do a more themed channel with things like promotions, contests to 'create our 30-second spot.'"

One of the first ad execs to sign up with YouTube for the new platform--Ian Schafer, CEO of Deep Focus--said it's a huge leap forward for the site. "The challenge historically was how do we take advantage of YouTube, not just as a vehicle for distribution, but for promotion? Now we can put video content on the site, pay for the promotion of it, and hopefully get some viral traction--all without interrupting the user experience, which is really the whole point," he said.

During the week ending Aug. 11, Deep Focus ran a week-long ad campaign in the upper right hand corner of the home page for "Pulse," a new movie from Dimension Films. Schafer said Deep Focus ran different trailers on the first three days of the week to keep daily visitors interested, and then on the last two days of the week--before the film's release--posted an exclusive preview clip from the movie.