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Online Ads Are Booming — IF They're Attached to Video — 11/16/2009 14:39 PM

Surprise, surprise … news web sites are looking a lot less like newspapers and a lot more like TV today.

Why?

Predictably, the major reason is commercial. At a time when other categories of advertising dollars are shrinking, video ads are booming. News sites are adding more and more video to keep pace with the demands of advertisers, from the higher cost-per-thousands, or C.P.M.’s, that ads on these videos command.

For example, CNN and ESPN are featuring video much more prominently on their home pages, even prompting visitors to press “Play” before they begin to read. The Wall Street Journal has moved its video player front and center too, with a twice-a-day live newscast on WSJ.com.

The attention to video mirrors changes in how viewers are experiencing news. Major events, be it the presidential election or the death of Michael Jackson, bring a surge in streaming video viewing by new users, and each time more of them stick around.

“Every watershed event leaves video more popular than before,” says Charles W. Tillinghast, the president of MSNBC.com, a joint venture between NBC Universal and Microsoft.

K. C. Estenson, the general manager of CNN.com, a unit of Time Warner, observes: “People are using the Internet in a different way now. With broadband becoming ubiquitous and more and more sites having this easy capability, people expect video to be there.”

While media companies typically do not break out figures for video advertising, data available from other sources indicates that video revenue currently pales next to search and display advertising. But the growth — especially notable under the dismal economic conditions we’ve had in the last two years — has spurred investment and interest in video production.

Among Web sites operated by newspapers, The New York Times, Gannett and Tribune each reach more than a million viewers a month with video streams, comScore says. The home page of The Times sometimes streams live video of events; it carried a news conference Friday about the shootings Thursday at Fort Hood, Tex.

Beyond news sites, video is now the fastest-growing segment of the Internet advertising market. Digital video amounted to $477 million in revenue in the first half of 2009, up 38 percent from the same time period in 2008, according to the Interactive Advertising Bureau.

The research firm eMarketer projects 35 to 45 percent growth for online video advertising dollars in each of the next five years, topping out at $5.2 billion in 2014. (Search advertising ie projected to be a $16 billion business by then.) They also predict that video ads would be the “main channel” for major advertisers seeking to increase their online spending. Already, video ads for companies like Johnson & Johnson and Unilever can be seen on all major news sites.

While advertising dollars have not always kept pace with growing view counts, video is currently the strongest ad format for WSJ.com, according to Mr. Quinn.

So who am I to argue? Bring it on and over to Million Dollar Web TV!

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