YouTube Ads Could Be a Boon, Blip for Google

Can Google's(GOOG) new YouTube video ads meaningfully pad the search company's bottom line?

That's what Wall Street's been trying to figure out since Google announced last week that its popular video-sharing site will carry discreet ads on some videos.

The most direct, back-of-the envelope calculations seem to suggest that the ads will fall short of moving the needle right away on a company from which analysts expect revenue of nearly $16 billion next year.

But if advertisers take to the new ad format, and if YouTube maintains its impressive growth, video ads could be a major source of revenue for the company a few years out.

And while online video-ad spending initially will likely come out of Internet ad budgets, the category could get a major boost earlier if advertisers begin shifting even a small fraction of their TV ad budgets into online video ads.

Though Google's video ad launch has invited a wide range of speculation about how much the new format can bring in, most estimates have been paltry, considering Google's size.

In a note to clients on Thursday, UBS analyst Ben Schacter estimated that the move could bring Google an additional $120 million. Blog AlleyInsider.com pegged the number at $108 million for the midpoint between its most bearish and bullish scenarios.