The gist of it is this: Google / YouTube has fastidiously avoided in-video advertising since its purchase. Probably because they were trying to figure out the best way of monetizing the site. Which is a good thing (monetizing that is), as YouTube serves up billions of minutes of video per month, all waiting to be monetized in a way that serves the video uploader / producer, as well as the advertiser, and of course Google.

The reason why its a “big deal”? Not because other sites haven’t already done in video advertising. Look to sites like VideoEgg for things like that. No, the reason why its a big deal is because YouTube is sitting on an absolute gold mine of material that people are spending minutes — nay, hours — watching every day, week, or month.

Google announcing its monetizing YouTube in a creative non-obtrusive fashion is like Google announcing that its monetizing its search with its Adwords technology.

There’s no question that there’s going to be a slow roll-out, almost certainly slower than with Adwords, because they’re limiting exactly where the ads go and who can advertise. But, from what I understand about how these will work — in the bottom half of the video, only starting 10-20 seconds into the video, which can be switched off any time, and put on a frequency such that users aren’t ‘saturated’ with in-video ads — I’m encouraged to hear how this actually works out for advertisers and Google.

Because if the conversion rates *do* pan out the way the initial stories make it seem like, then wow — this isn’t say, bigger than Jesus, but its another huge milestone in Google’s monetization of its assets and one that no Google-watcher should over look.  It might not transform the way online video is being delivered, but it has the potential to transform Google’s bottom line into something even more impressive than it already is.