Seeking Alpha
Profile| ()  

You’ll notice very few ad units while surfing YouTube, and none at all while watching videos contributed by ordinary folk like you or me. The reason? Google (GOOG) fears the legal repercussions of monetizing user generated content that may infringe on somebody else’s copyright.

But YouTube’s homepage is different since it merely displays thumbnails that may lead to infringing content. And it has capitalized on that page by selling a video ad unit in the upper right-hand corner for $175,000 per day (plus a commitment to buy $50,000 more in advertising elsewhere on YouTube or Google).

According to Silicon Alley Insider, YouTube is about to focus even more intently on leveraging its homepage for profit by selling large format ads that expand to fill the whole page. The ad unit, expected to come in the following weeks, will start at a price of about $200,000 per day with rates increasing in the Fall.

YouTube recently experimented with these expandable ads for Pineapple Express. When clicked on, a video ad for that movie expanded to fill the whole homepage instead of playing back inline. The video was also in high definition rather than YouTube’s normal, crummy quality, and it could be viewed in true fullscreen mode as well.

YouTube is still trying to figure out how to make more than a trickle of money for Google. The industry is watching to see how effectively the company can monetize in-video advertisements, but these currently are run only in a very small fraction of the site’s videos. Overall, YouTube is expected to make about $200 million for Google in 2008 (a tiny 1% of its total sales), mainly from these homepage ads and branded channels, which go for $200,000 a pop.

Image courtesy of NewTeeVee

Original post

Source: Google's YouTube To Squeeze More Money Out of Homepage