Follow the Money in Online Video

Filed in archive Business Trends on June 12, 2006

Online video appears destined to have a more significant impact on online ad spending.

A survey of top ad executives by the American Advertising Federation found that 62% of ad executives say that online video has had no effect on their ad spending plans during the 2006-07 upfront TV advertising negotiations.

On average, the ad executives said they expected to spend 20 percent of their total media budget on online media, up form about 15 percent in 2005. By 2010, they expected online's share to grow to 32 percent of all media spending.

While search remains hot, it is projected to continue trailing online display advertising next year, but will actually overtake it by 2010. Search is projected to have an 11 percent share of online ad budgets in 2006, but will grow to 23 percent by 2010, while display advertising will grow from 13 percent in 2006 to 18 percent in 2010.

Newer online platforms are projected to get a relatively small percentage of online budgets next year, though so-called "social media" may get 7% and video should receive 5 percent. Podcasts are projected to get only a 4 percent share of online ad budgets, while blogs and mobile advertising are projected to get a 2 percent share each. Advertising in online video games will command only a 1 percent share.

Respondents also said that they are willing to pay a 14 percent premium for behavioral and demographic targeting services for online ads.