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Online Video Advertising Starts Looking Good

Turning the volume up

Substantial growth for online video advertising depends on the audience and the inventory—enough people to watch the ads and enough space to encourage mass marketers to buy the ads.

"With 67% of all Internet users now viewing some form of video advertising—in-stream, in-banner or in-text—at least once a month, the audience has reached critical mass," says David Hallerman, senior analyst at eMarketer and author of the new report, Video Advertising Growth Factors. "At eMarketer, we are estimating that by 2012 four out of five Internet users will view video ads, and that means the ads will be ubiquitous."

eMarketer projects that 129.5 million people will view online video ads this year, and that number will rise to 183.3 million in 2013.

"Another key factor in the growth of video advertising will be an increase in the amount of trusted, professional-quality video content,” says Mr. Hallerman, “which will attract a broad base of viewers and give brand marketers the mass reach they seek."

Currently, short-form videos are what consumers respond to online, but the problem is they are typically too short to run along with more than a 15-second ad, and even that can be too long.

"The growth of long-form video online—defined as TV episodes, Web-only shows, complete sports events and full-length movies—will create a wide range of inventory," says Mr. Hallerman.

While long-form Internet video will not supplant television, it supplements it in two key ways:

It shows elements that are not covered fully on the tube, such as with the Olympics or the national political conventions.

It expands the audience. For example, Olympic Website traffic peaked at noon, undoubtedly when many people were at work.

"Even so, even with the positives, media companies' fear of cannibalizing their legacy business model will slow placement of video assets online," says Mr. Hallerman.

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