When Google shelled out $1.65 billion for YouTube two years ago, you had to figure that the company had some plans on how to make money with the site. Apparently not. Google is admitting that it’s still not quite sure how to make money with the property, though folks seem sure there must be some way. Still, from this discussion it appears that the massively hyped video overlay ads haven’t really lived up to expectations.

To be honest, it still seems like the wrong thing to do to figure out how to stick ads on YouTube — because no such ad is going to get very much attention. People come to YouTube to watch the videos they want to watch, not to be annoyed by an irrelevant ad. Instead, the real focus should be on the fact that YouTube videos themselves are advertising — the question is just: for what?

Source: feedburner.com