Google tests video ads on YouTube mobile site

Google, Inc. (NASDAQ: GOOG) has finally started trying to monetize its YouTube service through video ads, and now the world's largest internet search service is toying with advertising at its mobile video website as well. So far, Google is only testing display advertising (small banners) on its mobile website and only on select pages for U.S. and Japanese visitors.

For now, this is only a "test" for YouTube. Google's Christine Tsai indicated that there are "millions of people who visit YouTube every day" on their phones. Google CEO Eric Schmidt has repeatedly said that Google's mobile presence is the key to the future, since there are a disproportionately larger number of internet-capable cellphones in use globally than PCs.

Schmidt has even called finding the right advertising model on YouTube the "holy grail." He's right -- but the only problem is that Google still has not found a mass advertising model for YouTube (mobile or not) that works when deployed property-wide. While Google continues to seek other revenue sources outside text advertising -- currently its only real cash cow -- YouTube probably presents the next best revenue source for the online search leader. That is, if it can make the YouTube ad model as unobtrusive as the search advertising model.