According to a new report from Borrell Associates, local online video advertising, worth about $161 million in 2006, is expected to grow to $371 million this year, or 5% of all local online advertising, and to exceed $5 billion in next five years..
In 2006 the market for locally targeted online video ads became a legitimate market in Chicago , New York and Los Angeles (the three largest markets) worth more than $5 million each. The next 37 largest markets each saw more than $1 million in revenue from online video, according to Borrell. The study claims that "infomercials" are said to drive the increase in the advertising market, not traditional 15-second commercials
In 2006 newspapers sold approximately $81 million in local online video commercials in comparison to $32 million sold by TV broadcasters. And, according to a report from the Television Bureau of Advertising, online TV revenues were up 41% in 2006.
The study also found that print media is using the Internet as a new medium to reach TV advertisers, while TV broadcasters have been utilizing the Internet to reach traditional print advertisers. The trend has led to most local TV websites hosting classified ads, and nearly half of the newspaper websites offering video content. This shift in website advertising is changing local advertising with banners and paid listings decreasing, and video ads and paid search increasing.
Broadcasters, are expected to bounce back this year, though. With an increasing number of video streams available on TV Websites, 80% of broadcasters surveyed expect to sell streaming video ads this year, up from 72% who did last year.
According to the study, online competition with newspapers and broadcast TV stations is expected to increase with both sides continuing to develop video products for the Web. Automotive advertisers will be key in the competition, along with real estate, health and employment.
Borrell concludes that the online video advertising market is expected to increasingly revolve around the strength of Websites' video content.