Better YouTube Ads: The Holy Grail

Google CEO Eric Schmidt spoke out once again about the company’s need to better monetize YouTube, during a call following the company’s under-performing second-quarter earnings announcement.

“I personally do not believe the perfect (YouTube) ad has been invented,” he said, in a showing of impatience for the asset’s inability to provide the expected return on its $1.65 billion investment. This has been a favorite subject of Schmidt’s lately.

The gist is that pre-roll hasn’t really worked and “in-chrome” ads (placed around the video window) have shown marginal user acceptance, while contextually relevant overlays have been the most successful so far.

These aren’t good enough, said Schmidt. Most would agree. The elusive goal is a format that is contextually relevant and adjacent, yet not intrusive. (YouTube has the additional challenge in having content that is mostly deemed questionable by brand advertisers.)

“That is the holy grail,” said Schmidt. “When we find it, it [monetization] is likely to be very large because of the scope and scale of YouTube.”