You are embedding a “shockwave flash object,” so locate the shockwave flash object on the Developer ribbon under More Controls (see PowerPoint Options to enable the Developer ribbon):
Then go to the Web and locate your video. At YouTube you’ll see the URL of the video you choose in your Web browser’s address field.
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Copy the URL;
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Click on the shockwave flash object in your presentation;
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Choose Properties on the Developer ribbon; and
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Paste the URL into the “Movie” field under Properties.
And now, here’s the trick:
When you paste the URL into the “Movie” field, you have to change it a bit:
That’s it! Close the Properties window and save your presentation.
When you come to the slide with the video in it, simply click on the start button in the middle of the video image.
Hope you like it.