YouTube debuts online video advertising strategy

By Michele Gershberg

NEW YORK (Reuters) - YouTube is making its biggest push into video advertising on its Internet site, a key strategy by owner Google Inc (GOOG.O: Quote, Profile, Research, Stock Buzz) to capture an even greater share of Web marketing budgets.

Google has tread cautiously since buying YouTube for $1.65 billion last November, keen to make money off the burgeoning use of Internet video, yet wary of turning off viewers with intrusive advertising.

On Wednesday, YouTube will launch a way to link video clips with advertising it says makes sense contextually, with the aim of spurring viewers to seek more information.

Rather than load a commercial to the start or end of a clip, YouTube will introduce an animated overlay across the bottom of its video player screen.

The overlay appears shortly after the beginning of the clip and invites the viewer to click and watch a commercial or trailer on a new screen that opens within the original viewing box. If the viewer has not clicked on the ad, it will disappear within 10 seconds.

"The philosophy at YouTube is pretty much core to what we at Google do generally, which is that all the ads we serve need to provide value to the end user," Eileen Naughton, Google's director of media platforms, told Reuters.

"Our advertising partners are eager to use YouTube as a branding platform," she said, adding the new InVideo format has signed on 50 advertisers for its launch this week.

In one example presented to reporters, a "how to" clip on evening hairstyles from the Ford modeling agency also offered a glimpse of the movie trailer for the film "Hairspray."