A lot of people have recently been discussing the video advertising outlook for 2008. 

Most sites which provide some kind of streaming television, or video on demand, are rapidly changing their business model to an in-video advertising funded one.

Research by Yankee Group suggests that revenue attributed to downloads and in-streaming advertising is forecasted to grow significantly over next five years.  

By 2011, in-stream advertising revenue is expected to reach $3.89 billion dollars and revenue for downloads will contribute $850 million.

Important Metrics

Two important metrics driving the growth of these revenue streams are the number of users who watch online video and the amount of time spent watching online video – both of which are on the rise.  

As the number of users and time spent viewing video increases, advertisers will bid up the CPMs thus driving higher the top line revenue attributed to in-stream advertising.  

IDC research also suggests that approximately 1,200 terabytes of data are consumed each day in the U.S. alone by users watching online video.  This number is expected to grow to an astonishing 7,800 terabytes/day by 2011.

Pre-Roll Vs In-Stream

Pre-roll and in-stream video ads, whether online or mobile, represent a huge opportunity to monetize content.  

The opportunity also creates additional stress on existing transcoding resources, requiring operators to increase their transcoding capacity to keep up with the push to monetize more content in more formats.  

We agree with Jay Braage, that online video is the key to the media castle – but new approaches to video transcoding is what will help deliver video to wider audiences and thus giving operators new opportunities to cross-market content and open new advertising and revenue streams.

Originally written by Brendon Mills of the RipCode Blog. RipCode offers on-demand video transcoding solutions to ease the process of re-purposing video into multiple viewing formats.

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