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.

When Tom talked about Google, Inc.'s (NASDAQ: GOOG) failure to properly monetize YouTube, he questioned if Google's purchase of the world's largest video-sharing site was a mistake. In relative terms, Google's use of stock to purchase YouTube was a short-term impact more than anything. But he's right -- YouTube still has not found a secret sauce to monetize the huge amount of video traffic being sent to and viewed from the site every second of the day.

What has taken Google two years to figure out here? YouTube has been a playground for testing different online video monetization methods, but none of them have really worked. YouTube started out as a grassroots video-sharing site, and as its customer base has grown, it's one area where ads continually have been shunned by its viewers. So, Google may be giving up and going to a traditional method of selling advertising on YouTube: the pre-roll and post-roll ad video clip.

This model has been used on news websites and most other types of video sites with success. It's a model that works. Plug in a 10-second or 15-second video in front of (and following) a customer-requested video clip and that advertising model works. Publishers have to keep them short (10 seconds is optimal), of course. So far, Google has shunned this kind of traditional video advertising on YouTube. But, as the Wall Street Journal reported this week, it may be ready to forge ahead with this model. It needs to get a respectable amount of revenue from YouTube somehow, because now, it's not.