Online Video Advertising Reported for Less (but Still Strong) Growth

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Online video advertising isn’t recession-proof from growth, according to David Hallerman, Senior Analyst for eMarketer and author of their recently released report, Video Advertising Online: Spending and Pricing. But while there’s considerably less growth for video advertising this year than originally anticipated (Down from eMarketer’s last year’s estimate for 2008 of $1.35 billion to $505 million), Hallerman says in his interview with ReelSEO’s Grant Crowell that the desire for its growth in the market is still very strong.

Even with eMarketer’s adjusted forecasts, online video advertising’s spending growth is expected to show a year-over-year spending growth of between approximately 50%-80%.

Because online video advertising comes from a much smaller base compared to much larger marketing channels such as television, “it is still going to still have the largest growth by comparison.” Say Hallerman.

Of course, its important to consider total ad spending to really get a proper idea of where online video advertising stands. For 2008, “just 1% of U.S. television advertising would be $700 million. All of online video advertising is estimated at only half a billion dollars.” Says Hallerman. Compared to television ad budgets, “online video advertising shares are almost nothing.”

Hallerman’s report says that over the next 5 years, video ad spending gains will far surpass those of the other seven online advertising formats (in the following descending order): sponsorships, search, lead generation, classifieds, rich media, e-mail, and display ads. However, in terms of total ad spending, video will still contribute less than 10% of the total Internet ad universe, trail behind (in ascending order): online classifieds, display and search. (And, less than any one of paid search, static display ads, or classified ads.)

Most advertisers still experimenting with video ads

Hallerman also says that there are now hard-and-true marketing strategies for advertisers with video, and that its still very much of an experimental time for most of them to figure out how they can take advantage of the video space.

“A lot of advertisers who want to do video online are figuring out where the best placements are, where the best ad formats are. For example, do they do a pre-roll or mid-roll? Are they going to be making a new creative for the Internet, or are they just going to repurpose what they’re already showing on television? And figure out what sites are best? It’s still very much of an experimental time. I wouldn’t call that either good-or-bad, just still very much figuring out how to play this game.”

Hallerman also says that viral video, which can receive the largest amounts of eyeballs, can be problematic for video advertising.

“The caveat is that most viral video is short, and short video doesn’t really support video advertising.” He says. “Also, a lot of viral video can be user created, and those are the sort of video that most advertisers do not want to put ads against. If the video content is in itself an ad, it would have to be short, professionally created, video with ads embedded.”

The challenge of viral video and video advertising

“A perfect example is Saturday Night Live’s videos of Tina Fey doing Sarah Palin, which is being distributed on a number of popular sites. But even those being short snips, did not embed ads in. It goes back to figuring out what works. The absence of ads there is an indication of the media companies are still figuring out how to play the game.”

And as for viral video for small businesses as potential ad revenue, Hallerman is skeptical. “The production costs are low enough now that you can throw them out against the wall and a few will stick, but most of them won’t.”


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