YouTube, Google’s video sharing site, is adding banner ads across its site designed for mobile phones, the company announced on its blog today. Banner ads are shown on youtube’s mobile site and not on regular site accessed from computers.

It’s just the latest example of Google trying to monetize its wildly popular video site. Doug Anmuth at Barclays says this is the year YouTube will be profitable on $700 million in revenue.

Google told ” Mobile phones are rapidly becoming essential tools for surfing the web, connecting with friends, and sharing and watching video online, and we’re seeing these effects at YouTube. The YouTube mobile site is more popular than ever: site traffic grew by over 160% in 2009, and now millions of people all over the world are streaming tens of millions of videos every day on their mobile phones. The mobile space moves fast, so we’ve been working hard to roll out new features and functionality quickly, especially as more and more people adopt YouTube-capable phones.

Our first tests of YouTube mobile ads — with brands ranging from L’Oreal to Land Rover — showed strong results related to click-throughs, user experience and brand awareness, and we’ve learned a lot in the months since then. As a result, ads on the YouTube mobile website will be banner ads sold on a full-day basis (like with the YouTube homepage on the web), making a mobile buy an easy and valuable addition to any YouTube campaign. For example, today Mazda is running a homepage ad on YouTube.com, and extended their campaign to run ads on our mobile site as well.”