If you have any lingering doubt that online advertising in the form of video is seeing explosive growth, consider this: Spending on online video advertising will reach $410 million this year, 82% more than was spent in 2005. By 2010, Internet video advertising will be a $3 billion business, according to eMarketer’s latest projections.


Google, arguably the dominant force in online advertising, recently cast a vote of confidence in Internet video with its purchase of YouTube. But what factors will drive average annual growth of 64% in spending on Internet video advertising for the rest of the decade? Two are clear:

  • The great desire among companies and their agencies for targeted ad messages in a familiar creative format
  • The obvious parallels with television, the long-favored mass medium, and the need to replicate that medium’s advantages on the Internet
Another factor delivering high-percentage growth numbers is obviously the small base from which online video advertising has started.

Phenomenal growth and an exciting development on the Web, no doubt, but it is important to keep this trend in perspective: Even with all the excitement, online video advertising will account for only 2.6% of this year’s $15.9 billion US online ad spending total. Spending on Internet video ads will account for 11.5% of all online ad spending in 2010, but it will still represent only 3.3% of TV ad spending in that year, according to eMarketer’s projections.

So, as with so many hype-fueled Internet trends, online video advertising cannot be ignored — but it must also be seen in the context of the whole advertising universe.

More here.