Online video advertising - a growth opportunity

eMarketer estimates that while online video ad spending in the US represents less than 4% of all Internet advertising, spending will more than triple to $4.3 billion by 2011 - especially as more viewers embrace full-length TV episodes and other video online.

The recently released numbers from the IAB (Interactive Advertising Bureau) for FT 2007 are more conservative, identifying video advertising revenues at $324 MM for FY 2007 out of the total US online revenues of $21 billion but the expected growth of video advertising has prompted the IAB to release of format guidelines especially covering pre-roll ads which are limited to 30 seconds.

Echoing these sentiments, the Newspaper Association of America (NAA) has just released a report “Zooming In on Online Video: A Development & Growth Guide for Newspaper Web Sites.” that discusses the increase of online video (11.5 billion videos were viewed in the US March, according Comscore).

Additionally, to help identify the revenue opportunity around online video advertising, the NAA has issued a detailed report Making Money: Pre-Roll, Post-Roll and the Ads In Between

The main conclusion: everyone needs to jump on online video. “While still a small percentage of total and local online advertising, online video represents an enormous opportunity for newspapers to grow revenue and audience,”

For the sites that monetize their online video pre-roll and banner ads are the most frequently sold advertising formats.

To date, although there is huge pressure from advertisers to run pre-rolls, Google has decided to go for the much less intrusive in-video advertising recently releasing the AdSense for video program

The relevancy of the video advertisement and its duration obviously are major factors in user satisfaction. Some publishers are finding that while users dislike the initial pre-roll video, they are willing to watch a "post" pre-roll that links the first video with subsequent ones.

Some other interesting video advertising technologies include those from VideoClix and Asterpix.These technologies allow objects in the video to become hyperlinks. Viewers can click on these in video hotspots and either additional information can be displayed in the viewer or they can link off to receive additional information or to buy a product.

To date, hot-spot objects require a mouse roll-over or click but with the success of Apple's iPhone, it's not hard to image that the user interface will be adapted to accommodate touch screen technology.

Online video ads are quickly becoming the medium of choice to drive both brand awareness and direct sales and rapid growth is expected over the next couple years as marketers start to see the ROI returns. Publishers need to be ready.