November 7, 2006

According to eMarketer, overall spending on Internet video advertising will reach about $410 million in 2006, a 82 percent increase when compared to what was spent last year. In less than four years from now, online video advertising will be a $3 billion business in the US.

Arguably the most powerful player in online advertising, Google recently cast a vote of confidence in Internet video with its purchase of YouTube. However, what factors will drive average annual growth of 64 percent in spending on online video advertising for the next three years? Two are already clear:

* Companies want targeted ad messages in a familiar creative format
* The obvious parallels with television, the long-favored mass medium

A third factor delivering high-percentage growth numbers is obviously the small base from which online video advertising has started.

It's important to keep this trend in perspective: Even with all the excitement, online video advertising will account for only 2.6 percent of 2006's $15.9 billion US online ad spending total.

Spending on Internet video ads will account for 11.5 percent of all online ad spending in 2010, but it will still represent only 3.3 percent of TV ad spending in that year, according to eMarketer's projections.

As with so many hype-fueled Internet trends, online video advertising cannot be ignored, but it must also be seen in the context of the whole advertising picture.

Source: AdWeek