I’ve been keeping track of - and tabs on - the alleged growth in online video advertising forecasts.
Here are some of the previous forecasts:
- An estimate of the US online video ad market for 2009 - set in 2004: $657 million | Source.
- An estimate of the US online video ad market for 2009 - set in 2005: $1.5 billion | Source.
- An estimate of the US online video ad market for 2010 - set in 2006: $2.3 billion | Source.
- An estimate of the US online video ad market for 2010 - set in late 2006: $3 billion | Source.
- An estimate of the US online video ad market for 2011 - set in late 2007: $4.3 billion | Source.
- An estimate of the worldwide online video ad market for 2011 - set in 2007: $10 billion | Source.
- An estimate of the US online video ad market for 2012 - set in 2007: $7.1 billion | Source.
Today Lehman Bros. came out with another set of forecasts for US online video advertising revenues:
- 2008: $1.091B
- 2009: $1.669B
- 2010: $2.387B
So while indeed, these remain bullish forecasts, they do seem lower than the previous targets. I do wonder what the quants at Lehman would project for 2011 and 2012. It would be nice to see where their crystal ball pegs those projections.
I don’t mean to disrespect Lehman… but what’s the point of forecasting one and two years out when existing models have done it 5 years out? I’m just saying, ese…
Anyway, Note that eMarketer had pegged this year at $1.35B, up from an initial target of $1.25B. I’m not sure if it’s a coincidence, but it is said that the Olympics would tack on $100M in online ad revenues. Could that be the additional spending? Not sure. Probably just a coincidence.
All in all, it’s important to note that we have yet to really crystalize what shall constitute “online video advertising revenue” with regards to formats. Covered that here, namely:
- The pre-roll? Nope. Let’s face it, this is the equivalent of the web’s pop-up and on the decline. Sure, traditional media firms are printing money thanks to pre-roll ads, but the danger is that they push away users and eventually shrink their audiences.
- The post-roll? That’s the pop-under… in other words, users are not as annoyed but marketers don’t think it’s worth a warm bucket of spit.
- The Picture-in-Picture? I suggested that… but not everyone digs that either?
- The Overlay? Video Egg made a clown of itself for boosting that… only to say that it represented tiny upside. I like this, but realize it’s not the equivalent of the 30-second ad… at all.
- The Companion ad is something I like and find valuable… after all, display banner ads in text content are worth jack because users scroll down and miss the ad quickly… but companion ads alongside video players are worth much more because they remain at eye-level… but try selling that to advertisers.
Moreover - and more importantly - will it really all be coming from advertising revenues, or licensing fees? I don’t think consumers want to pay for content, but what about other companies. We at WatchMojo.com are starting to generate more from licensing revenue than advertising sales. Over time, I expect advertising to surpass licensing, but right now, it isn’t. More brain farts here:
In Why Online Video Businesses are a Joke, I outline the case for paying for content in exchange for exclusivity, which is uber counter-intuitive in these days of hippie-minded super distribution.
In Does the Law of Diminishing Return Apply to the Theory of Content is King, I make the case that while every incremental unit of distribution/video consumption is welcome, when the ad model is under-developed (or crappy as I like to call it), you actually tend to dilute your offering by giving it away for free.
In Advertising vs. Licensing, we began to explore the merits of the two models, and argue that in early periods of growth, licensing will prevail, while in boom times, advertising revenue will outperform licensing and trace this obsession we have with speculative, straight advertising revenue share deals to two case studies: MTV and Google.
In Successful Revenue Models for Content Libraries, we outline all of the various options available to content owners.
Lastly, who will earn those revenues? We covered that here.
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