Report: Online Video Ad Spend to Reach $1B by 2011

Written by Ryan Lawler

Monday, April 27. 2009 at 03:45 PM EDT 2 comments

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Online video ad spend in the U.S. will top $1 billion in 2011, driven by growing consumption of professionally produced content online, according to new research by Magna Global .

Magna, a division within the Interpublic Group of Companies Inc. , reports that the market for online video ads will reach $699 million in 2009. According to Magna, that will be a 32 percent increase over the $531 million that was spent on online video in 2008.

Over the next few years, Magna says online video advertising will continue to grow steadily, with the market expected to reach $864 million in 2010 and over $1 billion in 2011. That represents a compound annual growth rate of about 36 percent from 2006 to 2011.

According to Magna, interest in the online video ad space is being driven by the growth of professionally produced content and broadband connectivity. While user-generated content "accounted for a significant volume of potential advertising inventory in the past," the time spent with professionally produced online video grew 24 percent in 2008, after a 50 percent increase in 2007.

Even so, the online video opportunity is still very small compared to traditional television. According to the report, consumers watched more than 490 billion hours of traditional television in 2008, which is 244 times more than consumers spent with online video that year. Even if online video continues last year's growth rate through 2012, U.S. viewers would still be watching 98 times more traditional TV.