Online video ads could see growth slow

29 April 2009

NEW YORK: Online video adspend in the US will increase by around a third this year, Magna, the media services firm, predicts, although it has also reduced the medium's estimated rate of expansion from forecasts made in mid-2008 as a result of the changing economic climate. 

Last year, Magna, which is part of Interpublic Group, projected that online video would see revenues rise by 45% to $805 million (€616m; £549m) in 2009, but it now expects the rate of growth to reach 32%, taking the overall total to $699m.

Brian Wieser, its global director of forecasting, argued that over the next few years, "traditional TV content, and traditional TV suppliers, will continue to account for the bulk of online video budgets."

Among the companies expected to be at the forefront of these trends are CNN, ESPN, and Hulu, an online video service that is jointly-owned by NBC Universal and News Corp

Wieser added that advertisers remain hesitant about running ads next to user-generated content on YouTube, which is owned by Google, although official content deals, such as that recently signed with Disney, will help change this situation.

He added that higher broadband penetration rates and the increasing number of networks and cable companies making their content available online should boost spending levels despite the downturn.

Data sourced from Wall Street Journal; additional content by WARC staff