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To try to understand—let alone guess—the future of video advertising, one needs to start by looking at the biggest trend in media over the past few decades.  In November 2006, Bear Stearns Cable and Satellite analyst Spencer Wang published a study called “Why Aggregation & Context and Not (Necessarily) Content are King in Entertainment”.  While Bear Stearns has since been acquired by JP Morgan and is now a mere footnote in business books, the study’s findings are more relevant than ever.  Let’s examine 8 key factors behind online video consumption.

According to a recent NY Times article, in the 1952-53 season, more than 30% of American households watched NBC during prime time, according to Nielsen.  In fact, up until twenty years ago, you could buy a 30-second spot on CBS, NBC or ABC and reach “everyone.”  Today, NBC’s prime time reach is 5%.  Sure, NBC is lagging CBS and ABC, but neither the Tiffany network nor Disney’s counterpart is faring much better.  The secret’s out: fewer people watch TV and teenagers spend every waking minute connected to the Internet, increasingly through the mobile web.

Factor 2: Deportalization is Here to Stay

As the media world becomes fragmented and consumers move online, the Web is following a similar path, known as deportalization: the move away from the dominant portals of old, as social networks gain huge followings and vertical niche sites gain smaller, but more loyal, followings.

Ten years ago, you could buy a banner on MSN, AOL or Yahoo and reach “everyone” on the Web.  Five years ago, you could get the same result by buying a text link through AdWords and reach consumers who were either searching directly on Google.com, or surfing on the countless number of websites that were part of Google’s publisher network through AdSense.

Read more . . .

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