• by Gavin O'Malley  @mp_gavin, June 17, 2008

Think the future of online video monetization is branded entertainment? Think again, said Jonathan Miller, founding partner of investment firm Velocity Interactive Group, and AOL's chairman and CEO from 2002 to 2006.

"Ultimately, branded entertainments aren't scalable," Miller said on Monday during a keynote address to kick off the OMMA Video conference in New York.

Branded entertainment's greatest virtue, according to Miller, is its ability to attract big advertisers to the new and untested world of video advertising. "But," he added, "It has to come back around to more traditional ideas."

This year alone, Velocity has invested in four Web video players: video ad network Broadband Enterprises; niche Web TV startup Next New Networks; talent management and video production company Generate; and video widget maker MixerCast.

"So, we're obviously bullish on video," Miller said.

What attracted Miller to each of the four companies is their status as "specialists," in video, "taking a problem and trying to solve it."

"It's very hard to be a generalist," Miller said of the video frontier. "You've got to focus on stuff and get it right."

But the key issue on which the future of Web video rests, according to Miller, is the standardization of video measurement. "Bar none, it's the biggest thing we need as an industry."

For his part, Miller favors the "video view" as the best way to measure video online.

Regarding other potential revenue models, Miller expressed his interest in well-targeted 10- to-16-second spots. "If they're well targeted, it's not so easy to write them off," adding: "A 30 would have to be very targeted."

Overall, Miller insisted that video is having a fundamental impact on the Internet.

eMarketer recently predicted that online ad spending will increase 23% over 2007--well above the 3.3% total ad growth projected this year. Overall, online spending growth is expected to drop to about 16% in 2009.

Yet by 2012, an anticipated boom in online video advertising--along with continued strength in established Internet ad categories such as paid search and classifieds--is expected to help push spending growth above 20% for the first time since 2008, according to eMarketer.

What's more, eMarketer recently estimated that one in two Americans, or 154 million people, will watch a video at least once a month in 2008. By 2012, the audience will hit 190 million as growth gradually slows over the next several years.

Recent studies also highlight the consumer shift away from TV to the Internet and the PC. In January, almost 70% of those surveyed in a "State of the Media Democracy" study by Deloitte & Touche's Development unit reported that they considered their computer to be more of an entertainment device than their TVs.

"We're not talking about non-video and video sites," Miller said of his vision for the Web's future. "We're talking about the video Web."