Barely a week after announcing the discontinuation of Google Video — in part because of its struggles with how to incorporate advertising into the videos — Google has announced that it will introduce an advertising feature to YouTube, the wildly popular video networking site that it acquired in 2006.

YouTube is an absolute phenomenon. It’s where teenagers post their own video diaries; it’s where struggling actors share audition tapes with the world (with varying degrees of success). It’s the place where you can go to see old, forgotten TV shows, and it was the source of questions for a recent Democratic party presidential debate. In just a few years its grown from a start-up to a worldwide sensation.

According to Nielsen/NetRatings (by way of the New York Times), YouTube had 51 million visitors in June, and “now attracts an audience that is larger than the combined audiences of its three nearest competitors, MySpace, AOL and Yahoo.”

Furthermore,

Its adoption of overlay ads for online video could turn the format into an industry standard, advertising executives said. The video ad market, which is expected to nearly double from last year to $775 million, has been projected to grow to $4.3 billion by 2011, according to eMarketer, a research firm.

So why would Google risk tampering with such a hugely successful site? There’s your answer. If indeed visitors don’t mind a few ads, then Google has nothing to lose, and everything to gain: The site has so much traffic that ad space is guaranteed to be premium.

However, visitors to YouTube may in fact have a problem with such ads. In that case, what’s to stop another video-sharing site, such as VideoEgg, from stealing some of those visitors?

It’s impossible to answer the question at this point. However, it should be noted that Google has a history of defying such odds.

At any rate, the roll-out of this new advertising will be designed to be minimally intrusive. Again, from the New York Times:

The company said late Tuesday that after months of testing various video advertising models, it was ready to introduce a new type of video ad, which it said was unobtrusive and kept users in control of what they saw.

The ads, which appear 15 seconds after a user begins watching a video clip, take the form of an overlay on the bottom fifth of the screen, not unlike the tickers that display headlines during television news programs.

A user can ignore the overlay, which will disappear after about 10 seconds, or close it. But if the user clicks on it, the video they were watching will stop and a video ad will begin playing. Once the ad is over, or if a user clicks on a box to close it, the original video will resume playing from the point where it was stopped.

“What we have come up with is a user-controlled ad format that is engaging,” said Eileen Naughton, Google’s director for media platforms. “We want our users to be able to accept and choose what type of advertising they engage in.”

For now, Google will place the ads only on video clips of its content partners — the more than 1,000 small and large media companies that have licensed their videos to YouTube. By doing so, YouTube will avoid the potential liability of having ads appear on copyrighted clips it is not authorized to display. And it will also prevent ads from playing on clips generated by users whose message may not be to the liking of advertisers.

The revenue from the ads will be split between the media partner and YouTube. Ms. Naughton said Google would charge advertisers $20 for every 1,000 times the ads were displayed. Google said the ads would begin appearing today throughout the site. Ms. Naughton also said advertisers would be able to take aim at specific channels and genres, as well as demographic profiles, geography and hour of the day.

If successful, the video ads could persuade more media companies to license their content to YouTube as a way to make money from it, analysts said.

“Today, YouTube is a sunk cost for Google,” said Darren Aftahi, a securities analyst with ThinkEquity Partners. “If they can couple the proper advertising with the proper content, there is a tremendous opportunity for the company.”

Read the original New York Times coverage here. And let us know what you think in the comments section, below.