YouTube has rolled out its initial foray into advertising within videos. They are utilizing ad overlays to show semi-transparent horizontal ad units which cover about 20% of the video player screen along the bottom. Here is an example of a YouTube in-stream video ad overlay.
This move by YouTube was long expected and represents just a first phase of roll-out. Over time, their approach will certainly evolve. YouTube is by no means the first company to experiment with different types of video advertising. Just a few of the companies innovating in this space include:
VideoEgg - Video platform for social networks (powering video for bebo, hi5, et. al) - was an early pioneer of the in-stream ad overlay model - even declaring that pre-roll ads were "pre-historic".
Brightcove - Video publishing platform for media companies large and small, they have been working with major content producers such as The Disovery Channel, News Corp, AOL, and Time. Experimenting with ads from Brightroll and from their own ad network.
Scanscout - Video ad network offering the promise of advanced targeting, working with blip.tv and others to roll out their in-stream video ad solution.
Adap.tv - Video ad network offering the promise of improved targeting, working with metacafe and others to roll out their in-stream video ad solution.
YuMe - A dedicated video ad network working with the likes of BitTorrent. They beat us out for "Best in Show" at the Under the Radar conference too :)
revver - Video ads network of video ads embedded into syndicated video content. Their ads are not allowed by major networks like YouTube however.
brightroll - In roll video ad network, working with firms like Brightcove.
etc. etc.
YouTube is of course viewed as a bellwether for the entire industry and their entry into in-stream video advertising validates the less invasive "overlay" approach. But are overlays the best approach? As many MBA's might say, I think that "it depends" :) It seems to me that multiple types of ad formats will continue to be used and evolve to suit the different viewing scenarios and content genres. I will speculate further in another blog post.