YouTube announced today that it is introducing a new ad format for its videos.  Dubbed InVideo ads, the ads are semi-transparent and occupy the bottom 20% of the video frame that start playing 15 seconds after the start of the clip.  After playing for 10 seconds, the overlay ads then shrink to a smaller button.  Of course the ad and button are clickable. 

Right now, YouTube is charging a flat rate of $20 CPM (per thousand viewings).  If you look at the most viewed YouTube video of all time, it has received 55,943,502 views.  That would have cost an advertiser a little of $1.1 million.  Not bad considering some paid search campaign budgets and the amount of impressions it would have received over the past year.

I think this is an important step to get a standardized working video advertising business model.  Video Ads charging a CPC can’t be far behind.  Some kinks that probably need to get worked out are determining what ad goes on which video, can video creators limit and/or choose what ads to display, and measuring the impact of these ads on sales.