Google has finally begun to experiment with video advertising on YouTube, a move it hopes will help reap some revenues from the site’s huge audience. The first ads will appear for mobile users in the US and Japan.

On the surface, it seems odd to place ads on mobile sites first. After all, many mobile users are on either limited bandwidth allowances or some form of pay-per-use deal, so they’ll likely find ads even more irritating than computer users. The irritation is enhanced by the way handset viewers are less likely to use tabbed browsing and simply visit another web page until the commercial is over.

However, while the mobile market probably isn’t the best indicator of how well YouTube users overall will react to advertising, it does gives Google a useful and manageable sample group to test both the technical practicalities and the emotional responses.

While Google has said YouTube is a long-term business project, it’s pretty clear it had to be monetized at some point. The bandwidth reportedly costs a million dollars a day: even for a giant like Google, that type of outlay with no return won’t fly with stockholders for ever.

Google’s official announcement of the tests suggests the goal is definitely to make mobile advertising a permanent feature. However, there’s no specific comment on whether the firm plans to extend this to the regular website edition.

It will be interesting to see whether Google explores the possibilities of location-based adverts on the mobile edition of YouTube. While there are serious privacy issues to contend with, being able to target adverts based on where the user currently is could command high rates. For example, a nightspot would likely pay top dollar to send promotional material to people who are in their vicinity in the late evening.

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Entry was posted on Tuesday, August 19th, 2008 at 4:37 pm under Cell phones, Google, YouTube.

Read more entries by John Lister.
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