Google tested last year a way to embed videos from different content providers and monetize them with video ads (only MTV participated in this test). Basically, you had a video channel that displayed a playlist selected by the content provider. The playlist was changed every three to seven days and it was an opportunity to deliver premium content that keeps your visitors on your site more.
Google wants to use a similar idea for YouTube. The new YouTube video units will let you create a video channel related to your site's content a monetize it with text or image ads. It's not clear what kind of videos you'll be able to add, but it's likely the videos will be from YouTube's content partners. Music labels and other important content owners already had a special YouTube interface that included AdSense ads, but they didn't allow to embed their videos because they didn't gain revenue from the embedded players (or at least not directly).
"[Relevant, premium content] Deliver high quality video content to your site. Choose categories or have Google target your site content, and decide which categories you want to exclude.
[Targeted, non-intrusive ads] Earn revenue from ads targeted to your site content and to the videos being played. Ads appear as part of the YouTube player and outside of the video content to ensure a smooth user experience."
The new video units are an extensions of the custom players, so they're customizable and look better than the standard YouTube player. The option to create a video unit is not yet available for everyone, but you should be able to see it when you generate the code for a custom player.
{ spotted by ProBlogger }
Update (October 9th): The feature is now live in the US. Video content comes from some small YouTube partners, including: TV Guide Broadband, Expert Village, Mondo Media, lonelygirl15, Extreme Elements, and Ford Models, but Google hopes to add bigger names in the future. "There are three ways to choose video content:
* Selecting individual content providers, YouTube partners who have chosen to distribute their videos to publisher websites along with targeted ads
* Selecting content categories, topics and themes of video content you'd like to show on your site
* Automatic targeting, in which the video content you display will be automatically targeted to the content of your site. You can assist the targeting by providing relevant keywords. (...)
Video units may display two types of ads: text overlay ads, which are displayed in the bottom 20% of the video as it plays, and companion ads, which appear above the video content within the player. The ads displayed can be either contextually targeted or site-targeted, and may be paid on either a cost-per-click or cost-per-thousand impressions basis."
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