• by Shankar Gupta , February 14, 2007

Newspapers have moved quicker than broadcast TV stations in adapting to an online video advertising marketplace, according to a new report released Tuesday. The report, "The New Frontier Local Online Video Advertising," estimates that the local online video advertising marketplace will reach $371 million this year - about 5% of total online ad spending - and that traditional media, especially newspapers are playing a significant role.

The report from media research and consulting firm Borrell Associates, estimates that newspapers already take in $81 million in local online video advertising vs. only $32 million for local TV broadcasters.

The report projects that the total local online video marketplace will surge to $5 billion by 2012, accounting for 35% of all local online advertising budgets that year.

Peter Conti, senior vice president with Borrell, predicted that the growth in local video would come at the expense of banners and classifieds listings. Conti added that local advertisers will be particularly eager to target video ads--an ability that they have found elusive offline. "These are the people who can't afford TV advertising," he said. "It's that kind of video and that kind of marketing that they've never been able to do or afford before, and it's affordable on a much more effective and efficient medium."

By the end of 2007, the report predicts, local TV broadcast stations will increase their total local online video ad takings by 178%, to $89 million. Part of that growth will come from a surge in video inventory; the vast majority (80%) of the 176 TV stations surveyed that didn't sell video ads on their sites last year say they intend to begin selling such ad this year. In total, almost all (94%) of the surveyed TV stations say they will be selling video ads in 2007.