Good news for YouTube: Bullish video ad forecast

(Credit: eMarketer)

Online advertising may be dragging, but one analyst firm expects the market for video ads to grow 45 percent to $850 million in 2009.

An eMarketer study released Tuesday forecast more growth in years to come: $1.25 billion in 2010, $1.85 billion in 2011, $3.0 billion in 2012, and $4.6 billion in 2013. That's good news for sites such as YouTube that are trying to build an online ad market around video, though the size of the market is still dwarfed by other types of ads.

The company also had a relatively rosy forecast for search ad spending, which pays Google's bills and which provided much of the impetus for Microsoft's attempt to acquire Yahoo.

(Credit: eMarketer)

"While search marketing is not recession-proof, it is recession-resistant, with spending growth in 2009 at 14.9 percent, to $12.3 billion," eMarketer said. "Because search is highly measurable, that will help retain many budgets and increase some others, as advertisers look for secure and effective marketing methods to combat the fear inherent in an economic meltdown."

eMarketer forecast search-ad spending would increase to $13.9 billion in 2010, $15.6 billion in 2011, $17.7 billion in 2012, and $19.5 billion in 2013.

(Credit: eMarketer)

TV ads, meanwhile, will shrink from $69.8 billion in 2008 to $66.9 billion in 2009, then down to $67.2 billion in 2010.

The company also predicted a new revenue model in 2009 for social networks, sites that so far have struggled to make a big business out of advertising. "E-commerce will be a growing revenue stream for social network sites. Expect both MySpace and Facebook to enhance their self-serve advertising systems to allow consumers and businesses to buy and sell real-world goods and services," eMarketer said.

E-commerce overall is expected to grow 4.1 percent from $136.8 billion in 2008 to $142.4 billion in 2009. By 2012, it should reach $183.9 billion.

[jonburg]

Yes, but where will this growth take place?

Will it be in professional video monetization in digital channels (ala Hulu)? Will YouTube's efforts at professional studio-produced video pan out? What video formats will YouTube run against true professional content?

Or could this growth be in UGC? Will YouTube crank out a new technology that allows safe brand advertising over their massive UGC library? Or will YouTube embrace piracy along the lines of MySpace, utilizing Auditude type technologies to detect studio content and serve studio backed advertising against this content?

I don't believe anyone would argue that online video will not grow. The real question is where.