Online video advertising represents one of the ad world’s fastest growing segments. Last year, New York City-based research company eMarketer estimated that spending for online video advertising will reach $410 million, an 82.2% gain over the $225 million figure in 2005. In as little as two years, eMarketer speculates that US marketers will spend over $1 billion.

By 2009 and 2010, as online video advertising becomes as mainstream as Internet advertising, online video advertising will be a $2.90 billion business.

With broadband internet connections now becoming the norm for the average Web surfer, the Internet is quickly developing into the medium that people watch, rather than read, writes Rob Gerlbeck in his enlightening article Video killed the banner ad (Marketing magazine).

Static banner ads, once the standard form of online advertising, have begun to infuse an eye-catching mix of sight, sound, and motion. The introduction of dynamic online videos has afforded them more capabilities to do more effective advertising on the Web.

An article on BtoB magazine online (Picture This by Kate Maddox), also points to this burgeoning phenomenon. Maddox states that online video is fast becoming the killer application of the Internet as various marketers begin to treat them as an essential part of their programs, utilizing online video ads in a variety of formats, be it a 15-second banner ad or a long-form documentary..

With the expected swell in online video spending, media companies are scrambling to get in on the action, as proven by the recent partnership between NBC Universal and News Corporation to form an online video ad network. The video network will be distributed by their partners, which include Microsoft Corp.’s MSN, News Corp.’s MySpace, Time Warner’s AOL and Yahoo.

These recent developments have forced marketers to take video marketing more seriously. They have started to allocate ad dollars for web-only videos. Rather than merely repurposing TV spots for the Internet, advertising agencies have also begun to do more original video production work targeted for online content.