How could that be? Is it even possible? Even if advertisers wanted to spend that much money online, where could they put it? Is there likely to be enough quality inventory for all of those ads? This has been a topic of debate ever since the online ad market began its resurgence two year ago.
While the demand for online advertising is growing fast, the supply of quality online ad inventory has been lagging. The key word here is "quality." Online ad spend is growing at more than 30 percent per year, but most Web sites have audience and page view growth rates that are closer to 10 percent to 20 percent per year. The latter is not keeping pace with the former. Since much of the online ad growth is from traditional brand advertisers, the explosion of new inventory from social networks, where the content is riskier, has not helped much. The shortage of enough high quality and easily accessible inventory is already starting to drive up pricing, which undercuts some of the economic advantages of online versus offline mass media. Tight inventory and higher prices are forcing advertisers to make buys on more sites and on smaller sites, which makes both their buys and their lives much more complex and much less satisfying.
So, while it may be easy to predict that the demand for online advertising could take on television-like scale in a few years, pragmatism tells us that it is just not possible. Pragmatism tells us that it will take many more years for online media to create the maturity and scale and buying simplicity necessary to easily absorb that kind of demand.
Is that our future? Are we destined to live in a supply-constrained marketplace?
While normally quite persuaded by pragmatic arguments, I am not convinced here. As challenging as it may be for the online ad market to absorb tens of billions of dollars in new expenditures each year, I am confident that it can and will. How? It's simple. Video.
The emergence of web-based video advertising, and the "sight, sound and motion" that it brings will give the online ad market the scale that it needs.
Am I drinking too much of the broadband Kool-Aid? Maybe, but consider my reasons.
The online ad industry can scale this market, and video will be a big part of it. It can absorb more spend. Sight, sound and motion can engage consumers better than static or basic rich media banners can. This will justify much higher pricing than we see today. It is already a staple on the home page of NYTimes.com. The rest of the next can't be far behind.