• by Joe Mandese  @mp_joemandese, November 29, 2005

Buoyed by the rapid growth of broadband penetration, the online video ad marketplace is on pace to triple to $640 million by 2007 from $225 million this year, according to estimates released Tuesday by online research aggregator eMarketer. Based on its current rate of growth, eMarketer projects advertisers will spend "at least $1.5 billion on video ads online" by 2010.

The forecast, part of a new Online Video Advertising report from eMarketer, is the most recent indication that conventional TV advertising and online are converging rapidly as agencies and marketers adapt TV commercials to the Internet, or craft custom online video messages.

"Video represents common ground for television and the Internet, not a field of battle," states David Hallerman, a senior analyst at eMarketer and author of the new report. Instead, he notes that online video ads often enhance conventional TV advertising campaigns, but combining a variety of marketing elements including: paid search, branded entertainment, viral marketing, consumer-generated media, behavioral target, Web site brand marketing and online gaming.

The convergence also is happening from the other end of the video spectrum, as traditional TV players adopt Internet-like capabilities. On Monday, digital video recorder marketer TiVo announced plans to offer a "TV-based advertising search solution" beginning next spring. The concept, which is being developed in conjunction with Interpublic, OMD, Starcom MediaVest Group, The Richards Group, and spot cable sales rep Comcast Spotlight, would effectively shift TV advertising to a "pull" model from its traditional "push" orientation, giving viewers the ability to request relevant, targeted advertising based on categories of interest.

According to TiVo, ads will be delivered to subscribers who can conduct a search for a product by category or associated with keywords, utilizing the same techniques used by Internet search engines to serve paid search ads and listings.

"Television and the Internet are developing new ways to complement each other," notes eMarketer's Hallerman, calling video the "common ground" between the two media.

The big factor driving eMarketer's aggressive estimates is the rapid adoption of the consumer broadband marketplace, making video advertising a more seamless viewing experience than via dial-up. According to eMarketer, more than half of US online households connect via high-speed access, and by 2008, more than half of all US households are projected to have broadband Internet access.