In 2005, 57% of teenagers in the United States create content for the internet - from text to pictures, music and video, and that number is on track to grow rapidly. In this era of new-media, the audience no longer passively "consumes" media (and therefore also advertising, its key revenue source) but actively participate in creating content in a variety of forms and scale. This has fundamental repercussions for traditional business models in the media industry, which are based on aggregating large passive audiences and holding them captive during advertising interruptions. The current trend is towards much smaller audiences. Instead of a few large capital-rich media giants competing with one another for these audiences, it will be micro-players competing or collaborating. 

One giant step in that direction took place in August 2006 when  YouTube, the Internet video phenomenon, announced a new advertising strategy focused on keeping its growing audience happy while giving advertisers something more than banner ads and contests to reach them. The San Mateo company has created a new advertising concept called participatory video ads. Each day at YouTube's home page (www.youtube.com), one video ad will be featured. It will rise and fall based on its own entertainment merits, judged by users. People at the site can rate the ad, share it with others, write comments about the ad, embed the ad inside their own videos or make the ad a favorite.  

Another possibility looming on the horizon for platforms like YouTube is the concept of branded content channels, where advertisers can customize their own space on those platforms and try to lure people to the channel with contests and compelling video content. Some channels might operate as television did in the early days with the advertiser offering programming as a sponsor. A credit card company, for example, might sponsor a travel channel.

Many advertisers have already enjoyed success by seeding YouTube with commercials or viral videos. A Nike clip of Brazilian star Ronaldhino performing soccer ball tricks is among the site's most watched of all time. Volkswagen clips have also been top draws. Recently, Smirnoff created a YouTube hit with its "Tea Partay" video of preppie rappers, which has already been viewed over 730,000 times. YouTube has experienced dramatic growth since its founding in February 2005. In July, it drew 30.5 million visitors, according to Nielsen//NetRatings, up 56% from the previous month.