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Report: Traditional Players To Drive Online Video Growth

Bad news for Google: the video advertising market isn't going to grow as fast as previously forecast, and most of the growth will be fueled by traditional players like ESPN.com, Hulu, and CNN.com, according to a new report from Magna, part of the Interpublic Group of Companies Inc.'s Mediabrands division. Advertisers are expected to spend $699 million on online video in 2009, up 32% from the $531 million spent last year, as reported in Online Media Daily.

Brian Wieser, Magna's global director of forecasting, said that while video advertising will likely outpace growth rates for other online ad formats, the new forecast represents "a notable down downward revision from last summer" when Magna said online video spending would rise 45% to $805 million this year. Wieser also noted that traditional TV content providers would drive most of the growth in online video.

Dow Jones' Scott Morrison says that the downward revision is a particularly big setback for Google, which has recently struck deals with big studios like Sony Corp and Disney to bring professional content to the video-sharing site in order to attract more advertising dollars. Google purchased YouTube in 2006 for $1.65 billion. Wieser noted that traditional advertisers are still reluctant to be associated with the user-generated videos common on YouTube, but he said Google's content deals should help to position the company over time to compete in the online video market.

Read the whole story at Dow Jones/Online Media Daily »

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