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The State of Online Video Advertising 2011

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Relative newcomer Brainient also has a simple solution for agencies and publishers to create interactive ads. Its BrainStudio solution is referred to as “PowerPoint for Video” due to its ease of use. It is clear that powerful online creation studios will help everyone quickly create ads with more individual control.

Money Well Spent

Where is the money coming from for all of this growth? eMarketer predicts that of the $28 billion spent online in 2011, about $2 billion with be spent on video advertising. That is several times more than will be spent on search advertising and banner advertising. One of the biggest reasons for the continued growth is the shift in advertising budgets from print and especially television into the online video world. The internet continues to become the main source of information and buying for more consumers every year. There is more professional-level video available, and both publishers and advertisers are looking for great content. Some of the executives I spoke with believe that the dollars spent on online video advertising will eclipse that spent on television advertising in the not too distant future. There are also lucrative monetization possibilities. I learned from several sources that publishers can currently expect revenue of $10–$20 CPM (cost per thousand) for video advertising versus $2–$3 CPM for common display advertising. It remains to be seen how long these CPM rates hold in an increasingly competitive landscape.

While most of the companies highlighted here are working predominantly in the American market, they all have an interest in opportunities in the emerging international markets. I spoke with Emanuel Gal, the founder and CEO of Brainient. Gal founded Brainient in Romania in 2008; he moved the company to London in 2009 upon realizing that he needed to be in the larger and more active European market in order to grow. While acquiring a million dollars in funding, Brainient has continued to grow by working with companies such as Bauer, RTL, and MTV. Brainient recently closed deals with Fox Networks and The Times Group in India. Its platform is built to serve television, and it is also scalable right down to smartphones. Brainient has found that for every British pound spent (about $1.50 U.S.), its advertisers are getting a £5 return (about $8 U.S.). Not a bad return on investment.

Into the Future 

I asked all of the executives to crystal ball the next couple of years in online video advertising. I heard much of the same thoughts with variations as to how change will come. Each of the executives I spoke with views the industry as both growing with the entry of more dollars and new firms, but each also acknowledges that consolidation is happening. Many of the larger players were in full acquisition mode in 2010. Tremor Media acquired ScanScout, Undertone acquired Jambo, and AOL acquired perhaps the web’s largest video syndication platform when it brought 5min Media into the fold. These trends will likely continue in the future. All of the executives believe that the growth rate of online video advertising is accelerating as television ad budgets move online. Increased advertising in social media and more targeted ads across devices using Flash, HTML5, and other technologies will provide more targeted ads and greater monetization possibilities. The online video advertising landscape remains a land of opportunity for those who can target the consumers that advertisers want and who can push the technology forward to achieve it. It will continue to be an exciting industry with even more excitement as the international opportunities explode.

This article originally appeared in the 2011 Streaming Media Sourcebook under the title "Before the Flood: The State of Online Video Advertising."

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