Online Video Ad Growth Seen Slower Due To Downturn
28 April 2009 - 6:52AM
Dow Jones News
The online video advertising market, seen as a key source of new
revenue for Google Inc. (GOOG), won't grow as quickly as previously
forecast and most of the growth will be fueled by traditional TV
players, according to a new report.
Advertisers are expected to spend $699 million on online video
ads in 2009, up 32% from $531 million spent last year, according to
a new forecast by Brian Wieser, global director of forecasting for
Magna, a unit of Interpublic Group of Companies Inc.'s (IPG)
Mediabrands division.
Wieser said video advertising will likely outpace growth rates
for most other online ad formats, but the new forecast nonetheless
represents a notable downward revision from last summer, when Magna
said online video ad spending was expected to rise 45% to $805
million this year.
The downward revision, while not surprising given current
economic conditions, is a setback for the Mountain View,
Calif.-based search giant, which has recently struck deals with big
studios such as Sony Corp. (6758.T) (SNE.N) and Disney to post
professional content such as films and TV shows on YouTube in a bid
to attract more advertising dollars.
Google's core search business hasn't been immune to the
recession, and the company is under growing pressure to generate
additional revenue from its wildly popular YouTube site, which it
purchased for $1.65 billion in 2006.
A Google spokesperson wasn't available to comment.
Shares in Google ended Monday trading down about 0.91% at
385.95.
The Magna report said wider availability of premium network and
cable TV programming and increased broadband penetration, would
partially offset the impact the recession was having on overall ad
budgets.
Wieser also noted that most of the growth in online video
advertising over the next few years would be driven by traditional
TV content providers, such as Time Warner Inc.'s (TWX) CNN, Walt
Disney Co.'s (DIS) ESPN, and Hulu, a premium video site jointly
owned by NBC Universal (GE) and News Corp. (NWS)
"Over the next few years, we expect traditional TV content, and
traditional TV suppliers, will continue to account for the bulk of
online video budgets," said Wieser.
Wieser noted that traditional advertisers are still reluctant to
be associated with the user-generated videos common on YouTube, but
he said Google's content deals should help to position the company
over time to compete in the online video market.
-By Scott Morrison, Dow Jones Newswires; 415-765-6118;
scott.morrison@dowjones.com