eMarketer estimates that this year US online video ad spending will reach $775 million, and grow from there.
At 89%, 2007 will show the greatest year-over-year growth for US online video advertising. Coming from such a small base, however, makes this high rate relatively easy to attain. More important indicators come over the next four years, as spending continues to rise at rates of 39% or higher.
Still, putting these high growth rates into perspective, video will represent only 3.6% of the total online ad spend this year. Even by 2011, when video ads will be commonplace on the Web, less than 10% of the annually escalating spend will be devoted to the format.
"Looking over the numbers, it is not difficult to see how even a small shift in TV ad spending will be a driving force in overall Internet ad spending gains," says David Hallerman, eMarketer Senior Analyst and the author of the new report, Video Advertising Online: Spending and Audience. "Video will be behind the wheel."
Video's high engagement factor, combined with the Internet's tracking and targeting capabilities, potentially offers brand advertisers a highly accountable method to sway the hearts and minds of their target audience. For Web publishers, video advertising represents a new and potentially large revenue stream.
"Unfortunately, a third element in the equation — the audience — is not entirely ready for TV-like advertising on the Internet," says Mr. Hallerman.