Youtube have taken a break from deciding which kind of video content to show, and moved on to what kind of advertising to show.

The video giant have struggled to make a profit from their mega successful video website. All sorts of experimentation have been going on including overlaid ads at the bottom of videos, they have also tried showing ads in-stream and before, during and after videos.

Now YouTube are going in another direction, with user interaction ads. This basically involves letting viewers choose between watching either a long pre roll ad before the video, or commercials shown during the stream.

It is very similar to how its big rival Hulu do things. During some TV series and movies that run on the online video site, it gives viewers the option of watching one minute long commercial at the beginning of a video, or several ads running 15 to 30 seconds apiece.

Product manager of Youtube, Phil Farhi revealed the advertising tests on Monday in a post on YouTubes blog. “We are constantly testing a wide range of options to find the right advertising format for the right content on YouTube, and we think giving users a say in the process helps our efforts,” he said.

YouTube spokesman Aaron Zamost said Monday afternoon that the “Promoted Videos” run in various lengths depending upon the advertiser. He said the pre-roll, mid-roll, and post-roll ads tend to run 15 or 30 seconds for each one.

He also commented that YouTube plans to run the test for a few months during a small percentage of the full-length videos available on YouTube. YouTube has added several full-length TV series to its site in recent months, ranging from ABC’s Jimmy Kimmel Live to National Geographic Channel specials and classic TV shows such as MacGyver and Beverly Hills 90210.

YouTube and parent Google continue to dominate video websites in traffic numbers. According to ComScore, Google sites generated 6.8 billion videos viewed in April, with YouTube accounting for more than 99 percent of those views.

However YouTube still haven’t begun to generate significant ad revenue from video streaming. Although Google doesn’t detail YouTube revenue and earnings in its financial reports, analysts estimate that YouTube generates anywhere from $90 million to $240 million in annual revenue.

The problem is that they reportedly spend much more than that in server and bandwidth costs.

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