Welcome to WebmasterWorld, nephrium.
I think the person talking to your owner was not talking about the ads run on youtube, but rather the videos themselves.
Today, youtube gets more search volume than yahoo - it is #2 overall. People who "want" something or want to learn more about something often goto youtube to watch videos about it. For example, try putting in the name of a recipe or car brand. Search "how to [insert task here]" and you will find a video about that.
The key is to realize that people looking at those videos are interested in the products featured, even if they don't realize it. For example, watch a video about how to cook Coq au Vin and you might realize you need to buy a Double Boiler - a cooking pot featured in the video.
Youtube now also allows you to put clickable links on top of your videos - you can easily link a product to a website for example.
But, how do you monetize that? Home shopping style videos are probably not the answer. People are savvy and know when they are being pitched.
But, if you were a cooking products website, for example, you could produce lots of short cooking videos featuring your products with links. People would watch your videos for the informative content and realize they need your products as they watch.