Video Ad Spending Growth to Drop Dramatically

Online video advertising is a shiny new toy in the marketer’s box of tricks. As such, people think its use will only increase and it will be more recession proof than traditional or other forms of online advertising. But eMarketer released a report today saying that growth in online video ad spending will drop dramatically in the coming year, falling to 44.9 percent in 2009 from 81 percent in 2008. That translates into online video ads reaching $850 million in 2009 from $587 million in 2008.

While the growth percentages are still in the double digits, not as much is spent on video compared with other forms of advertising (search ads are already a $10.6 billion market and rich media ads are $1.88 billion), which means small changes have big impacts. The total market for online video ad spending will reach $4.6 billion in 2013. In August, eMarketer chopped its estimate for 2008 U.S. video ad revenue in half to $505 million and at that time had predicted that by 2013 those revenues would reach $5.8 billion. Earlier this week, another eMarketer report that said the number of online video advertising viewers would increase from 129.5 million in 2008 to 174.8 million in 2012.

Of course, these are just projections and a lot will change over the coming years to alter the online video landscape. YouTube is making a big push to monetize its content, launching sponsored videos and allowing ads in embeds. Hard-to-measure formats like product placement are gaining prominence, and startups like Keystream and ZunaVision are opening up new advertising real estate within videos.

Check out video from our “Truth About Advertising” at NewTeeVee Live, where a panel of experts talked about the challenges facing the online video ad sector.