ClickZ's Kate Kaye wrote an interesting article yesterday on the revenue that is flowing into local video ads on newspaper websites. Interestingly, newspapers beat out local television station websites for video ad revenues according to a recent Borrell Report.
Though the $371 million expected to be spent on local video this year only represents about 5 percent of the $7.7 billion total for all local online ads, it will be more than double the amount spent last year. $5 billion is expected by 2012, which is more than the amount currently spent on online banner ads and listings.
According to the article:
However, these small numbers represent entirely new revenue channels for local television and newspaper properties, which are competing against one another for advertisers long considered the stations' turf. In fact, newspapers are ahead in this game.
Broken down, newspaper web sites took in $81 million in local streaming video ads in last year, compared with the $32 million spent on local television web sites. In many cases the newspaper revenue came from up-sells from classifieds listings, and the biggest categories taking part in video advertising so far have been auto, real estate, health and employment. The biggest markets meanwhile have been New York, Chicago and Los Angeles.
Borrell predicts "there will be a lot of money made on the tens of millions of unsold pre-roll video avails across thousands of local Web sites." However it has been mostly unanimous that consumers don't like pre-roll ads. A more likable and pervasive form of online video advertising could instead be sponsored videos, over 60 seconds in length, by the likes of home improvement, health, and legal advertisers. This form factor accounted for about two thirds of online video spending last year according to the Borrell study.
The key is that the video advertising dial is moving towards local, driven by growing amounts of affordable online ad inventory. Bring in companies like Spot Runner that further put video advertising withing the grasp of small business advertisers, and this starts to get interesting. It will take some time before the paradigm shifts in the marketplace so that small business advertisers are aware of and interested in these opportunities, but this will happen.
Elsewhere in the world of online video, The New York Times reports how many radio stations, in order to gain a competitive edge, are broadcasting themselves (a la Howard Stern), on popular online video channels such as YouTube. Greg Sterling also points to a comprehensive index of the online video space by the Read/Write Web. And lastly, online video publishing and syndication network Veoh re-launched earlier this week. Lost Remote has the scoop.
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