Posted July 16, 2007 11:39 am by with 3 comments

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eMarketer is predicting a huge surge in online video advertising spending over the next four years, with this year’s $775 million growing to $4.3 billion by 2011. While the number sounds impressive, it will account for just 10% of all internet advertising and will be a fraction of the $46.3 billion spent on TV advertising by 2011.

Business Week explains why online video ads will grow so easily.

It’s after 2011 that the floodgates will really open, says eMarketer senior analyst David Hallerman. By then, the distinction between television and Web video will be so blurred that advertisers will begin directing more of their marketing budgets to the online version. “All you have to do is take a few percentages off of a TV advertiser’s typical budget and that is going to be a large amount of money,” says Hallerman.

Sounds simple enough, doesn’t it? Online video ads are cheaper to make, more accountable and so why not just take some money from the traditional TV advertising budget? It may not be that easy. After all, search engine marketing is cheaper to implement, much more accountable, and yet still only accounts for a small fraction of most companies’ total advertising budget.

The key to this huge growth is acknowledged by Hallerman. The lines need to blur between online and offline video quality. We need to get online video watching (and content) in line with TV, otherwise it’s going to be tough to convince marketers to spend four billion dollars for ads that run alongside video of Mentos dropping into a bottle of Coke.

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    I’m not totally sold on the idea of video banner ads. In a sense, they’re like TV commercials, but more intrusive and harder to ignore. That intrusiveness can be seen as either an advantage or a disadvantage, depending on who your target market is, and what sites you’re placing the ads on.

    I know that, personally, if I land on a site and a video ad starts playing, the very first thing I do is to turn the ad off (or at least mute it, if there is no “stop” option). If you’re marketing to tech/net savvy people, their reaction will likely be the same.

    If you’re advertising to people who aren’t as internet savvy, they might not realize that they can turn off the ad, and will be more likely to pay attention to it (or they might just navigate away from the page).