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Wednesday, Aug 22, 2007 2:00pm

YouTube tests video ads

Google's sub-brand YouTube today revealed that it has begun testing ads accompanying its videos, marking the first time since YouTube's founding that the company has relied on video advertising rather than static images or content deals to pay for its costs. Rather than embed the ads themselves into users' clips, the new technique overlays a small Flash ad at the bottom of the segment. Users can either click and momentarily interrupt the intended video to view the ad or let the overlay disappear completely within 10 seconds.

The system allows advertisers to offer far longer clips such as movie trailers while being as unintrusive as possible, YouTube says, and also allow advertisers to change which clips receive given ads, including by region and time of day. Deals for the first run of ads have been struck with BMW as well as Fox, New Line Cinema, Warner Music, and several other smaller partners. Unlike the majority of Google's current business, however, the system will pay strictly for viewing ads and will cost each advertiser about $20 for every thousand viewers.

The move may have significant ramifications for Apple, whose Apple TV media hub and iPhone both feature a YouTube interface but lack the Flash animation component necessary for displaying ads. Neither YouTube nor its parent Google have addressed the question of whether views on Apple devices will affect advertising costs or if a potential update to either product with Flash support would enable ads.