2011: The Year Video Explodes

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explode_smallADOTAS – With online advertising revenues at record highs, $6.4 billion recorded in Q3 2010 according to the IAB and all eyes on online video as the key growth driver for the sector throughout 2011, the future looks bright as we prepare for the New Year.

So what’s in store? Here are my top five predictions for online video advertising in 2011:

1. YouTube will reign as the top video advertising network. YouTube is all about mass reach and already controls about 40% of the online video advertising inventory. As the video site adds more pre-roll in its quest to prove its value to the Google coffers, it’s poised to dominate as an ad network. YouTube’s leadership position will put even more strain on the currently fragmented market and result in further consolidation among ad networks.

2. Hulu will abort its IPO. Any talk of an IPO is tantalizing fare for a market eager to move into more bullish times. However, the big news is that Hulu’s plan to go public won’t materialize — the broadcast networks just won’t let it happen. Here’s a more likely scenario: Comcast buys out the other partners and makes Hulu the anchor to its “TV Everywhere” efforts — the so-called consumer-friendly approach to holding the line between free and paid TV on the Web.

3. Brand advertisers will realize that young influencers are unreachable on TV. It was a long and largely happy marriage, but the split was inevitable. Brand advertisers -– at least those targeting 18 to 34-year-olds –- will accept, finally, that Internet devices have largely replaced the TV as the central source for entertainment and information among this key demographic group.

4. Online video will power the connected TV. Connected devices are here. And people will continue to watch TV as usual. What’s new and interesting is the interactivity that will manifest in two ways: on-demand entertainment and short-form video discovery. Bringing the engaging entertainment experience of short-form video to the living room will be the driving force that brings advertising dollars to the connected TV.

5. Brand advertisers will shift dollars to online video faster than quality online video inventory will grow. P&G, Unilever and other top advertisers – especially those targeting youth audiences — will shift meaningful dollars from TV so quickly that online video CPMs will significantly increase due to basic supply-and-demand economics.

So, what do these predictions mean collectively? 2011 will be a landmark year for the online video advertising industry.

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