Online video advertising set to boom

According to a report by eMarketer, published today in MediaDailyNews, the online video advertising marketplace is expected to triple to $640 million by 2007 and reach $1.5 billion by 2010. eMarketer analyst David Hallerman states that online video ads often enhance conventional TV advertising campaigns.

“Television and the Internet are developing new ways to complement each other,” notes eMarketer’s Hallerman, calling video the “common ground” between the two media.

The big factor driving eMarketer’s aggressive estimates is the rapid adoption of the consumer broadband marketplace, making video advertising a more seamless viewing experience than via dial-up. According to eMarketer, more than half of US online households connect via high-speed access, and by 2008, more than half of all US households are projected to have broadband Internet access.

The sad reality for many broadcasters is that $640 million is a drop in the bucket compared to the $47 billion spent on all television advertising last year. TV sales people are ensnared by self-interest when confronted with commissions on a $50,000 sale versus a $5,000 sale. On which would you rather spend your time?

But this is a trap, because while broadcasting treats online video advertising as a second-class citizen, other entities are (and will be) picking up the growing scraps. New habits are being formed that will leave broadcasters scratching their heads when they finally realize they need to compete here. The online video marketplace is very different from over-the-air, and repurposing news clips isn’t going to cut it downstream.

I’m reminded of that famous quote attributed to the late Senator Everett Dirksen: “A billion here, a billion there, and pretty soon you’re talking real money.”

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