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Online video usage is exploding online, as people watch everything from YouTube to TV shows to sporting events — but mainly, YouTube. But the question is how sites will be able to pay for all that usage. Most video viewers would prefer not to pay for them, nor watch any advertising either.

So I put the question to you, dear MediaShift readers: What kind of video ads would you actually welcome? In other words, is there a type of advertisement that would work well with your video-watching experience — instead of annoying you? The overwhelming response was that people still don’t want intrusive ads, but they will accept brief “micro-ads” that are relevant to the content or are approved and voiced by the video producer or host. (Not surprisingly, that’s almost the exact same response I got a year ago when I asked about advertising on YouTube.)

Advertisers, take note: Here’s a list of attributes that people generally agree they would welcome with video ads.

Contextual ads

Most video ads feel intrusive or jarring because they are not aligned closely with the subject of the video. If they could become more relevant and contextual, as Google AdSense ads can be, then they would be more welcome by viewers.

For instance, Adam Mercado from Influxx Media says, “Ads are a necessary evil. The trick is to get them as targeted as possible, which often means giving up a certain amount of user info. Privacy issues come into play. Hopefully a sweet spot will emerge where a little user info can be traded for highly targeted, useful ad content. And the web can remain free.”

Or, as cheese-blogger Jamie writes: “If those [Hulu] ads were actually tailored to my interests, they’d be even less intrusive.”

Host-approved ads

Another strong vote was given to ads that were more like underwriting or sponsorships on NPR or PBS — very brief messages explaining who the sponsors are. Those messages could be voiced by the host, giving the sponsors a kind of seal of approval. Video-maker Brook Hinton says he can accept “short ‘sponsored by’ or ‘supported by’ messages, NPR -style, at the beginning and/or end. Text or voice-only, and completely separate from the rest of the video.”

Videoblogger MissBHavens is also more forgiving of ads that are producer-approved and voiced. “I click away the second a pre-rolled ad starts unless it’s some sort of verbalized ad by the host/hostess I’ve clicked through to see. I can live with that,” she wrote. “Something about that says ‘the people you’ve chosen to watch may have picked their sponsors by hand, so it may be of interest since they themselves are interesting.’”

Micro-ads

Another popular format are micro-ads that are even shorter than pre-rolls, clocking in at a few seconds and giving you the sponsor’s message in a quick, almost subliminal flash.

Kate Martin says that a micro-ad could work in less than 5 seconds. How exactly? She points people to this McDonald’s ad on YouTube and says you could just take the first five notes of the song and put the Golden Arches over it to convey the commercial message.

Of course, the question for advertisers is whether these ads would work well enough to get their message across in a valuable way.

Product placements (with disclosures)

Video producers could use product placements in their videos, basically taking payments from companies that want to promote their products within the video content. Mark Van Patten explains:

I think advertisers are missing great opportunities for product placement…Makers of ‘edgy’ products would do well to search out the prolific edgy video-makers and provide them product to use in videos.

The big issue would be whether the product placement was disclosed or not in some way that would be obvious to viewers. Brook Hinton says product placements need to be disclosed at the start of the video or else he considers them even more tasteless than ads.

No ads

Of course, everyone had their hackles up about video ads in general. They see enough ads everywhere else, they don’t like long pre-roll ads that run before content (especially before short content), and they don’t like the interruption of overlay ads that pop-up over the video.

But The Digital Hobo gives a reality check to all the ad-haters:

The broader context of the issue is one that the public hasn’t quite grasped or accepted. Everything on the web is NOT free. It is ad supported. The text-based web was much more affordable than the high-bandwidth video web 2.0 we have today. That means content owners need to generate more revenue….When people skip ads on the DVR, they are breaking the ‘old deal’ that TV had with the audience. ‘You pay attention to the ad, we give you free TV.’ Now we need a new deal.

Indeed. Perhaps there will be no “silver bullet” that solves the video ad problem. Perhaps there will be a combination of ad formats and business models that will spring up to make online video viable. The truth is that viewers will need to find an ad format they can live with, while marketers need to find a way to make their ads less intrusive, more relevant — and more welcome.

For more on video advertising, check out my last in-depth post on MediaShift, Online Video Ads Finally Find Their Niche.

MediaShift will be taking the rest of the July 4 week off for a family holiday. We hope you get to enjoy some downtime and a “technology sabbath,” too! We’ll be back posting next week.

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