Report: Local Video Advertising to Hit $371 Million Mark by Year’s End

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A new report from Borrell Associates claims that local online video advertising will more than double this year to $371 million, up from $161 million in 2006, and is expected to reach $5 billion by the year 2012. In the study, “infomercials” are said to drive the increase in the advertising market, and not traditional 15-second commercials.

Other aspects garnered from the study deal with newspapers and whether or not they are profiting from video advertising over local TV stations, and the answer is yes, according to Borell. 2006 saw $81 million spent in local advertising, streaming video ads, on newspaper-run websites, while TV broadcasting only took in $32 million.

What the study also found is that print media is using the Internet as a new medium to reach TV advertisers while TV broadcasters have been utilizing the Internet to reach traditional print advertisers. The trend has led to most local TV websites hosting classified ads and nearly half of the newspaper websites offering video content. This shift in website advertising is changing the local advertising arena with banners and paid listings decreasing, and video ads and paid search increasing.

Online competition with newspapers and broadcast TV stations are to increase while both sides continue to develop video products for the Web. Automotive advertisers will be key in the competition, along with real estate, health and employment, according to the study.

Still, the $371 million figure accounts for barely 5% of all local online advertising, and amounts to less than half of 1% of total local advertising, Borrell notes.

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