YouTube is now the world’s second most-used search engine behind only its parent-company, Google. It surpasses competitors Yahoo and MSN. What does this mean? Google has decided to test out the waters with some targeted search ads next to its web video offerings. I will let the New York Times explain:

So it is not surprising that YouTube’s parent, Google, is thinking of turning those searches into dollars. The company has begun testing video ads that are aimed at specific YouTube searches. The system works a lot like the hugely profitable AdWords system for search ads on Google. Type “Tina Fey” into YouTube’s search box and, along with the search results, you may find a somewhat relevant ad for the movie “W” as well as a significantly less relevant ad for the University of Phoenix. (This is a test, after all.) The “W” ad links to a trailer on YouTube for the Oliver Stone movie and the University of Phoenix ad links to that school’s YouTube channel.

The new YouTube ads were first reported at Advertising Age.

Google is already known for its unobtrusive AdWords and AdSense programs. Customers don’t mind the extremely targeted search ads, because it is often exactly what they’re looking for.

The search ads now being tested are in a cost-per-click format (like AdWords and AdSense), but as Aaron Zamost (a YouTube spokesperson) states in the Times article, YouTube is still trying a variety of search ads formats, and may not stick with a single option.

Even though it looks like Google is going to stick with what works – cost-per-click ads that are relevant to a user’s search keywords – there will be differences.

For instance, as both Advertising Age and the New York Times article point out, people on YouTube aren’t looking for product information. They want videos, and only videos. They want to be entertained. Yet even so, advertisers only pay when a user clicks the ad. The trick will be keeping those users happy once they get to the advertiser’s site. That’s traditionally done with landing page optimization.

It’s a fresh web development to keep your eye on, especially while its in its infancy and lacks a large base of subscribed advertisers.

It might also be a spectacular business opportunity for those quick enough to take advantage of it.