It's the Google mashup of AdSense and YouTube videos and it's about time! In my experience AdSense and AdWords have consistently been up there with the most cost effective, lead generating marketing programs. Google has set the standard on non-intrusive design and placement of relevant ads on the web. That's why it's not surprising to see they've done the same with videos.
Thanks to Ekalavya, a contributor on the WATBlog for this clip showing what the video ads look like:
Many questioned the YouTube purchase amid all the trouble with the networks, etc – but if Google can figure out how to effectively use YouTube to enhance their core offering, I think you’d have to call it a win. Google reinvented the art of making money on the internet and YouTube is arguably the most powerfully viral internet app since MySpace and before that, Hotmail. If Google can take full advantage of YouTube to serve ads, I pity da fool that has to compete with them in the ad wars.