YouTube Introduces Skippable Ad Format

Simply running ads with online video irritates most people without bringing much value to the advertiser. YouTube is trying to correct that by giving users the option of skipping ads, so only interested viewers will choose to watch.

Google-owned YouTube added to videos on Thursday an ad-skipping button that has to be pressed within the first five seconds to be effective. The advertiser will choose whether to offer the option.

YouTube is positioning the ad format as a win-win for viewers and advertisers. The former can skip ads they have no interest in, and the latter gets to see who is watching the ads. Demographic and other information YouTube gathers on users can be used by advertisers to learn more about the people interested in the products or services promoted.

The pool of potential customers for those advertisers is huge. YouTube draws almost three times the number of unique viewers than its closest rival, Yahoo, according to ComScore. In October, YouTube reached the 1 billion subscription mark.

YouTube will charge advertisers only when a viewer has watched the full ad or the first 30 seconds, whichever is shorter. In testing the service, called TrueView Video Ads -- InStream, YouTube found view-through rates of 20% to 70%. A view-through rate measures how many viewers opt-in to watch an ad, which is a strong indicator of the ads effectiveness.

YouTube offered GoPro, a maker of wearable, gear-mountable cameras, as a customer reference. Lee Topar, director of online marketing for GoPro, says it has seen about a 40% view-through rate in testing the format. "Since we only pay when potential customers actually watch a video, we have more control over our budget," Topar says on the YouTube blog.

Besides product marketing, political advertisers have also tested the format. Emotive, an online marketing firm, tested the ad-skipping option during the recent campaigns of Rob Portman and John Kasich, who won the November election in Ohio for U.S. senator and governor, respectively. Emotive used the geo-targeting capabilities of the YouTube service in their county-by-county media strategy.

YouTube is making the TrueView, InStream, format available first in the United States and Canada. It is in limited testing in the United Kingdom and YouTube plans to make it available in other countries in the future. For now, advertisers have to contact a YouTube representative to buy the new format. The site plans to eventually offer it as a self-service option.

The latest announcement came one day after YouTube introduced an improvement to its video-streaming capabilities. The new feature, called Personalized Channels, lets users choose a topic, such as cooking, and get a steady stream of videos from the site. YouTube has offered suggestions for video streams based on what people have watched in the past. The latest feature is an attempt to offer users more control over what they can stream.

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