Reaching an Inflection Point—
The Time is Right for Online Video Advertising

By David Hatfield, Sr. VP Worldwide Products, Sales
and Marketing, Limelight Networks

The advertising industry has been in a state of flux for years. From traditional network television, to the advent of cable broadcasting, to digital TV and the explosion of online video, advertisers have had to find their way in a shifting landscape of content delivery.

The good news is that every advertising revolution brings a wealth of new opportunity. As baseline technology and consumer expectations change, there are new and more effective ways to reach consumer audiences whenever, wherever, and however they choose to watch video entertainment. The latest of these is targeted online video advertising.

There are a number of factors contributing to the rise of video on the web. To start, broadband connections are now ubiquitous enough to ensure that large populations have access to streaming video. Download speeds have increased exponentially, and—while connections vary—the expectation for an average Internet connection is that it will support video streaming.

Making Online Video Advertising Work

Added to the broadband phenomenon is the fact that popular computing hardware is now powerful enough to decode and display high-quality images. Online audiences have transitioned from grainy user-generated videos to professionally produced HD television online. Finally, there are more consumers turning to the Web for information and entertainment than ever before. Recent ComScore numbers show impressive market growth, with a record 14.3 billion online videos viewed in December 2008.

These factors are driving online video forward. But where does advertising fit into the picture? Out of the online experiments of the last few years, ad-supported streaming video has emerged as one of the big winners for content delivery. Along with subscription-based Internet video services, ad-supported streams have proven palatable to consumers and content providers alike. A whole host of companies, large and small, have tested out pre-rolls, mid-rolls, and interactive video tools embedded in the delivery of online entertainment.

As the medium matures, content and technology providers are finding ways to make these types of advertisements more effective—which, in turn, brings in more revenue from advertisers willing to experiment outside the bounds of traditional television. The result is that online video advertising is generating revenues on par with or better than those seen in the early days of cable, and continued healthy growth rates are projected well into the future.