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Web Video Advertising Outlook is Optimistic

The online video advertising growth predictions continue to be upbeat. Video advertising company LiveRail predicts that online video ad spending will near $1.4 billion in 2010, up from $619 million in 2008.

The company said that online video still represents only 2.4 percent of all online ad spending. Clearly the only way to go is up -- which is exactly the direction it's heading.

eMarketer's analysis, which considers predictions by multiple firms, puts online ad spending in 2010 at $1.15 billion, up from $505 billion in 2008. Similarly, online video represents only 2 percent of total online ad spending as of 2008, but will approach 10 percent in 2013.

Most online video ad spending predictions released in the past year are at least somewhat optimistic, and it is easy to see why. More than one-half of U.S. consumers currently watch online video, and by 2012 nearly nine out of 10 Internet users will do so.

Perhaps the more important point, from an advertiser's perspective, is what consumers are increasingly not doing while they're watching online video -- that's not watching traditional broadcast television.

Online households surveyed by The Conference Board and TNS in Q3 2008 said they watched TV online because it was convenient, it allowed them to watch on their own schedule, and it allowed them to skip commercials.

Notably, the percentage of responding households that said they watched online video to avoid commercials was down from Q3 2007. This may reflect a growing realization that commercials are a fair price to pay for quality content, or it may simply be a function of the growing number of ad-supported online videos.

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