• by P.J. Bednarski , Staff Writer @pjbtweet, December 21, 2012

Pivotal Research Group’s Brian Wieser’s new analysis  says online video is probably the biggest reason total online ad revenues grew by 18% in the third quarter.

Indeed, he writes, “For now we think it’s worth considering that online video advertising is growing faster than might be widely appreciated and well ahead of any changes in consumption.”  

His new data says it’s likely Google’s YouTube will exceed $1 billion in ad revenue in 2012—up from $800 million just a year ago, most of it from US sales. That would mean, if the widely-followed Wieser’s analysis is correct, that YouTube ad revenues would be just about as much the ad take from all of Discovery Communications domestic networks this year.

While a major point in the Pivotal research is that YouTube is an 800 lb. gorilla that continues to have a very healthy appetite, the overall takeaway is that online video from all sources is now emerging as Internet advertising’s current revenue driver.

Other online video providers are just part of the “long tail” of the revenue stream, because, in fact, YouTube alone accounts for half of all online video viewing

It’s YouTube along with Hulu that are taking most of the business. Pivotal says Hulu generated $300 million in ad revenue last year, and by some extrapolation of Hulu data ,Wieser thinks Hulu may have upped that to $430 million this year.  

Hulu itself reported that it expects overall revenue growth of 65% in 2012; figuring in subscription revenue, the Pivotal report estimates that means Hulu is about to post a 28% advertising growth step up in the U.S. from a year ago.

The Internet Advertising Bureau reported earlier this week that third quarter ad revenue topped $9.3 billion in the third quarter, up the aforementioned 18% from the year before, and up 6% from the second quarter. The source for all that money is spread around, of course. Pivotal points out that mobile ad growth is “gangbusters” and search continues to “be solid double digits ahead.”

But that was true in the first and second quarters too, when overall, online advertising revenue’s gains were up, but not half as much as they were the year before. So, it would appear, it was online video advertising, that created the revenue spurt.

That growth might have begun happening in the middle of 2012, roughly.

Wieser notes, but just tentatively, that might help explain the simultaneous lower rate of increase for national TV advertising at the same time.

Was that money diverted to online advertising? “We think it’s possible although we’re keeping an open mind on this,” he writes.

Wieser thinks it’s telling that Hulu’s unique viewers “appear to be falling as it has expanded its focus on subscriptions.” But at the same time, its ad revenue has increased as Hulu expanded the number of available units out there.

So, Wieser says, Hulu grew revenue without growing usage, apparently.  And if that’s true, he speculates, “just imagine what Google’s YouTube might be capable of?”

pjbednarski@comcast.net