The Search for Signs of Intelligent Life in the Universe

AAF (American Advertising Federation) recently issued their annual survey on industry trends. The survey asked advertising industry executives how much they thought ad spending on TV would shift to online video by 2010. Over half responded that they expected to move 20% or more of their TV advertising budget into online video. Even if the TV ad market is conservatively estimated to be $60B (not the $74B as estimated by Google), this shift translates to $12B in ad spend previously allocated to TV alone (not including ad dollars already allocated to online). That’s a 3,000% leap from last year’s (2006) $410MM ad spend. Rather than quoting my crude estimate, a Park Associates study stated that online video revenues will pass $7B in 2010, with 85% of that (almost $6B) coming from ads associated with TV, news & user generated content.

With that much money chasing online videos, its supply would surely keep up until equilibrium. Even that may not happen for a while, because the biggest barrier to consuming online videos lies in its discovery. If we thought flipping through 500 TV channels on our cable box is a tedious, wait till we get unlimited video channels. Discovery of video will be the immediate challenge. As consumers are used to search engines, reviews and recommendations to find what they are looking for, they will expect those tools to be available for video discovery as well. Video search engines like Blinkx, and personalization tools (ie Amazon’s & Netflix’s recommendation engines) would be in the next wave of products. The idea is to help your consumers find what they are looking for and they will thank you for that, and maybe watch a few ads in the process.