Firm Forecasts Online Ad Boom

Internet video advertising spending is expected to nearly triple over the next
two years, spurred on by increased broadband use throughout the United
States, and encouraged by recent content deals with big media companies,
according to a new survey.

Ad dollars will soar to $640 million in 2007 from this year’s $225 million,
according to the Online Video Advertising report from eMarketer. By the end
of the decade, advertisers are expected to spend at least $1.5 billion on
video ads online.

“Online video advertising used to be an oxymoron, but no more,” David
Hallerman, senior analyst at eMarketer and author of the report, said.
“Television and the Internet are developing new ways to complement each
other.”

One way these mediums are complementing each other is through content deals.
Earlier this month, America Online hooked up with TV firm
Brightcove to announce the latest video-content distribution partnership.

Brightcove offers Internet TV services for video publishers ranging from
small independent producers to major media companies looking to build their
businesses by distributing and monetizing their video programming through
broadband channels.

A new service from Brightcove, to be launched next year, will offer only
advertising-supported video in the beginning, but later will allow
publishers to charge fees for users to rent or buy videos.

Online video has the greatest potential to blend several hot marketing
elements including paid search, branded entertainment, viral marketing,
consumer generated media, behavioral targeting and Web site brand, according
to Hallerman.

“Video represents common ground for television and the Internet, not a field
of battle,” he said in a statement. “Winner-take-all is not the name of the
game.”

And the continued growth of broadband throughout the county, with 42 million
U.S. homes going online with high-speed connections, a 23 percent increase
from 2004, is a driving force in the emergence of online video, according to
eMarketer.

In 2007, the New York-based research firm forecasts 60.4 million households
will have broadband.

“All this is very good news for advertising agencies,” Hallerman said. “Now
the products they are best at creating – film and video commercials, or
‘spots’ — can be transferred to a new medium, new markets.”

AOL has been active in developing content deals this year, with plans
already in place to stream episodes from Warner Brothers’ television
programs free on the Internet. As early as January, viewers will be able to
watch old TV shows delivered across Time Warner’s Internet division America
Online on a broadband network called In2TV.

And other companies seem to be chasing the same ad dollars.

Google launched a beta version of Google Video earlier
this year and Yahoo has also entered the market.

“In real-world terms, what that means is marketing campaigns can extend TV’s
reach to the online space, enticing the target audience to spend more time
with a particular brand,” Hallerman said. “It also means using the
Internet’s ability to track consumers in ways that match up television
commercials with online and offline activity.”

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