YouTube’s Skippable Ads Go Mobile–Will People Watch Them?

From my Forbes.com blog The New Persuaders:

As uncertainty builds over whether advertising on mobile devices will work anything like their desktop Web counterparts, YouTube today tossed out its bet that they will. In a blog post, Google’s video service said it’s now launching its most successful ad format, skippable ads called TrueView that it has offered since late 2010, on mobile devices.

YouTube credits these ads with juicing its revenues, which Citi analyst Mark Mahaney reckons could reach $3.6 billion this year, or $2.4 billion after YouTube pays its video content partners. On desktop and laptop computers, some 65% of YouTube ads run inside videos are now skippable, but YouTube says only 10% of people always skip them.

They also command 40% higher viewership than ads people can’t skip, which makes advertisers more willing to pay a higher price, knowing they’re getting watched. As a result, says Shishir Mehrotra, YouTube’s vice president of product, YouTube video now produces more ad revenue per hour than cable TV.

These aren’t YouTube’s first mobile ads. It has offered “promoted video” ads as well as so-called “roadblock” video ads that appear an entire day on YouTube home and search pages since last November. But these ads clearly hold the potential to become the most popular format on mobile devices.

At first, the ads will be available only on devices using Google’s Android software. Why? Because Apple’s current YouTube app, the one it developed at the time it released the first iPhone in 2007, doesn’t allow ads to be run on it. Apple and Google recently said that app won’t be in the next version of Apple’s iOS mobile software, which will debut on the upcoming new iPhone, expected now around Sept. 21.

Instead, Google is working to get its new YouTube app, which will be able to run ads, approved for the new iOS. When it’s out, no doubt in coming months, we’ll get a much better idea of how YouTube’s skippable ads fare on mobile devices–and a better sense of whether mobile advertising overall will work.

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