The media is going crazy over YouTube contemplating using pre-roll ads in their videos, despite 75% of their viewer audience being opposed to it.
YouTube needs to weigh their options, and I see two main scenarios that could happen:
1. They introduce pre-rolls but viewers must opt into them, and creators must approve them to be included in their content. If they decide on going with this option, how many viewers will actually opt-in? The only way I see attracting a percentage higher than 1%, is to share ad revenues with the viewers, in addition to the original creators.
2. They introduce pre-rolls where creators must still approve pre-rolls in their content, but viewers have no choice but to watch pre-rolls. If this direction is chosen, I believe that a few million viewers would go elsewhere for their video initially, but many would return over time and surrender to the inevitable pre-roll format.
I understand that Google needs to start aggressively monetizing their 1 billion video views/day to offset their bandwidth costs, but I'm not so sure that pre-rolls are the answer. They are expected to make $200 million this year, but that doesn't get them to profitability.
Chad Hurley really understands that YouTube is all about the community, so I'm sure that he won't make any huge decisions like this without a sound understanding of how the core community feels about this move.
It's just too bad that advertisers aren't quicker to adopt the newer ad formats which are less obtrusive, such as instream, and overlays. On the positive side of the equation, if YouTube does in fact go with pre-rolls and it doesn't successfully work out, that could finally change the way advertisers think about online video advertising, and force new format adoptions.
If pre-rolls are introduced they will need to be short (under 10 seconds), but many agencies still produce 15 and 30 second ad spots, so a shift in creatives will need to occur. Frequency is also a very critical aspect of this equation as well, how often will we see these proposed pre-rolls? Every video? Every 3 videos? Post-rolls aren't as interruptive, so they can be a bit more aggressive with them if they decide to, but sacrifice higher CPM rates. What combination of pre-rolls and post-rolls would be ideal? There would need to be a balance between viewer experience, and desired revenue they hope to generate.
Other sites do use pre-rolls on their short form content, but it is considered to be professional, which apparently makes it more acceptable than YouTube's vast collection of User Generated Content. Can YouTube change the way advertisers negatively view this type of content, or will advertisers completely shy away?
Whether YouTube decides to go through with this experiment or not, has yet to be known. If it does happen, you can bet that the entire online video community will feel the impact that it unleashes.
