Report Sends Mixed Signals on Online Video Ad Market

While representing only 1.6 percent of total online and television advertising spending, and 4.3 percent of the online ad spend total, the market for video ads over the Internet is growing and is not necessarily taking money away from other media channels, according to a report released yesterday by eMarketer.


In the midst of a worldwide recession and an advertising decline — the broadcast upfront was down 20 percent this year — it may sound like great news. But for every dollar spent on TV, search and banner ads, less than 2 cents goes to online video ads.

The good news is that the market grew by 125 percent last year, but it will have to sustain 40 percent growth year over year to achieve the report’s projections of tripling its total share and doubling its online share by 2013, and then still be a bit player in the larger market.

The other bright spot is that for every hour of video viewed, online outlets outpaced television outlets with 17 cents in ad revenue compared with 13 cents. However, the cost of serving all the video that isn’t supported by ads significantly dilutes that 17 cents an hour. And both were down significantly from last year, a trend eMarketer predicts will continue.

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