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BizReport : Research : November 20, 2006

Online Video Ads Gain Popularity

With more than $410 million expected to be spent this year on online video advertising, experts in the industry are predicting that video spending will soon be on par with other forms of Internet advertising.

by Kristina Knight

Online video has shown a more than 80% increase over 2005. eMarketer is predicting that in two years, the video ad spend will be more than $1 billion and by 2010, online video will account for about $3 billion. So is online video the way to go?

Not entirely.

David Hallerman, eMarketer senior analyst said in a statement, "Even with such strong spending increases, online video still makes up a small share of Internet ad expenditures. In 2006, with all the hue and cry about video on the Web, that ad format will contribute only 2.6% to this year's $15.9 billion total."

Advertisers also need to take into account how streaming video is used by consumers. In a study commissioned by Podzinger, researchers found that on average users play only 15% of a video or audio clip. That means potential customers may not see enough of your ad to convert to sales. According to the study (via MediaPost), users don’t mind short ads – 10 to 15 seconds, as long as they aren’t repeated often. Users are also more likely to play video online rather than download it.

Online video is a great resource, but the draw of video and the consumers using the medium aren’t great enough yet to put all of your advertising eggs in video’s basket.

Tags: eMarketer, online revenue, online video, Podzinger

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  • While the video ad market sounds tempting to get into, it is still quite a ways from being a force in the online ad spend.

    There are a lot of things that need to be done, especially on the social networking sites, to ease the mind of companies that want to protect their brand and image.



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