Will that ever change? It depends. EMarketer defines search ads as:
- paid listings (next to a search engine's organic results),
- contextual text links (alongside content pages) and
- paid inclusion (in organic results).
In December 2009, eMarketer released its latest projections for U.S. online advertising, projecting search and video advertising to grow to $15.8 billion and $5.2 billion respectively by 2014.
Meanwhile, eMarketer defines video advertising as:
- in-stream (such as pre-rolls and overlays),
- in-banner and in-text (ads delivered when users mouse over relevant words)
- display banner ads that run next to video content... [which it] will call ... Contextual ads, as opposed to Companion ads which run automatically with the corresponding in-stream ads.
Video is growing at a torrid pace, as marketers increase video advertising at the expense of other forms of online advertising, with a plus 40% change in spending year-over-year.
In 2006, Google sought to position itself for the growth in online video by acquiring YouTube for $1.65 billion, announcing in 2008 that once monetization methods were implemented, it would prove to be the holy grail.
The Re-Resurgence of Online Advertising
In late 2008, a recession hit the U.S. and advertising halted. Unlike 2000, the Web economy wasn't to blame, but it wasn't immune either. But as the economy stabilized and marketers resumed advertising, ad dollars shifted away from old media to new: print, TV, radio and outdoor all got cut from ad plans.
While total advertising retrenched in 2008-2009, it is slated to grow again this decade by about 1% to 2% per year.
While content is content regardless of whether it is text, images or video, how the content is indexed and monetized varies widely. According to comScore, YouTube accounts for nearly 40% of video streams in the U.S.:
While YouTube began to accept pre-roll ads in 2009, display banners account for the lion's share of its revenues. In other words, YouTube's revenues are excluded from eMarketer's video advertising estimates.
Why Video Will Surpass Search This Decade
Reason 1 - The Definition of Video Advertising Will Change
Video advertising should consist of In-stream, In-banner as well as contextual display banners.
YouTube accounts for 40% of video streams, but generates the bulk of its revenue from contextual display ads that run alongside the videos. Excluding contextual banners from the definition would exclude YouTube's sales, which just doesn't make sense, especially since contextual text ads are included in search advertising totals.
Reason 2 - Display Advertising is Dead; Long Live Video Display Ads!
Expect a convergence of display, rich-media and video advertising, be it in terms of strategy, creative or buying.
Display banners work better for branding, but guess what works even better for branding? Video. Marketers will ask more from publishers, and the one asset publishers have is to start including video, either straight video content or video ads embedded in display advertising real estate.
If you agree that over time, all real estate will have some kind of videos, and add up the rich media, video and banners, online video is almost neck-to-neck with online search as we speak.
Reason 3 - Ad Networks Will Reinvent Themselves
Ad networks have made land grabs over a lot of real estate. Ad networks and text publishers are currently selling display banners at low rates (relative to video ads). If they swap out those display ads for rich media, the value of that real estate soars considerably. Of course, there is not that much demand yet for in-banner video ads -- but over time, there will be.
Reason 4 - Video Captures Interest and Will Siphon TV Revenue
Search captures intent, video captures interest. Intent drives performance campaigns, while interest paves the way for branding messages.
From 1994-2005, the Web was largely a print-based universe. So the first type of advertising to move online was based on print content, or classified ads, which totally captures intent. Online, the best medium to capture classified revenue was in fact search, be it via a search engine like Google or a directory such as Craigslist.
Television drives branding campaigns and as viewers move online, advertisers will follow, as will ad dollars. As such, the bulk of television advertising will skip over search ads and migrate to online video.
TV was always much larger than print advertising, and TV's bellwether is not search -- but of course, video.
With TV being a nearly $70 billion annual business in the U.S., you can imagine that in less than a decade, online video will see a considerable growth acceleration. Just last week at NATPE, legendary Hollywood creative and entertainment business leader Michael Eisner, CEO of The Tornante Company, admitted that he didn't know how the industry is going to play out, but didn't for a second doubt where the trend is headed: "I don't know if it will be evolutionary or revolutionary...but it can't not happen" Eisner said, referring to the growth in content made for the Internet. He added that a "death march" has been going on for other media. They are in trouble because there is a more efficient way to share content around the world with the Internet.
So, will video advertising ever surpass search advertising?
You can run the numbers and play with growth rates and estimate that before the decade is over, video will surpass search [the first time I looked at this question was in 2007, and concluded that by 2018, online video could surpass search. But as we've seen, projections don't mean much; common sense does. History is bound to repeat itself, and if what we saw in print happens to TV, surely video will overtake search, too.