Google snapped up YouTube six years back for $1.65 billion hoping to leverage from this video sharing site. Since then the site has evolved unquestionably but it took Google six long years to introduce a sensible secured business model. The search engine giant made this expensive purchase betting that the popular video-sharing site will provide it an increasingly lucrative marketing hub as more viewers and advertisers migrate from television to the Internet.

Finally Google Yesterday (Monday) announced the launch of AdWords for Video, a means of allowing businesses to build self-serve video ad campaigns via YouTube. In much the same way AdWords for search operates on a pay-per-click model, the video version runs on a per-view model, whereby the advertiser only pays if the viewer watches the ad to completion (since this is YouTube, the ads are delivered using TrueView technology, which allows the viewer to skip ads after a certain number of seconds has played). 

Users can also define maximum cost per view, or adjust bids based on engagement (taking into account, for example, click-throughs or shares). Current AdWords users can link up their YouTube and AdWords accounts, if they want, and in any case, the platform allows users to target audiences by language, location and other fairly straightforward demographics. From there, users can select videos they’ve already uploaded, set a bid and determine whether the ad is going to appear as pre-roll, adjacent to related videos or in search results. Google says AdWords’ video reporting delivers stats on what types of audiences are viewing the videos, how long they watch and what further actions they take.

YouTube previously had an ad-buying program but it was more complex and not well-integrated into the rest of Google’s AdWords, the system the company uses to sell search ads. Now, the system is completely built into the rest of AdWords.

Lane Shackleton, YouTube product manager, said the company is not raising the ad load, so users won’t notice more ads popping up before every video. But they are trying to make it easier for businesses to buy ads, and are particularly targeting small- and medium-sized businesses.

The system allows for extremely precise targeting, so businesses can designate exactly who they want to see their ad. A local pet store, for example, could target people who are over 18 years old, live in San Jose and are watching cat videos. A knitting store could target people watching “how-to” knitting videos.

“These niche audiences are on YouTube,” Shackleton said.

Google claims that video ads in general drive a 20 percent increase in traffic to a business’ website.

We wonder- whether the recently lost court battle and this announcement would have a direct correlation or not. YouTube could face a huge bill for royalties after it lost a court battle in Germany over music videos.

A court in Hamburg ruled that YouTube is responsible for the content that users post to the video sharing site. It wants the video site to install filters that spot when users try to post music clips whose rights are held by royalty collection group, Gema. The German industry group said in court that YouTube had not done enough to stop copyrighted clips being posted.

But one thing that is commendable is these developments are certainly introspective of Google CEO Larry Page’s ongoing efforts to restructure all of Google’s processes and products. Video viewing/sharing is indeed gaining enormous momentum in all the parts of the world and all the recent reports published across Middle East reinstate the same point. With this more structured ad format many more marketers would like to soak their hands in this video stream.