Market For Local Online Video Ads Will Reach $1.5 Billion By 2012Market For Local Online Video Ads Will Reach $1.5 Billion By 2012

The local online video advertising market in the United States will reach $1.5 billion by 2012, according to a report released this week.

The Kelsey Group announced Wednesday that the market's revenue would experience significant growth from $10.9 million in 2007.

Researchers predict that consumer adoption and conversion rates will drive small to medium-sized businesses to spend 11.6% of their online budgets on video ads by 2012. Video production companies and Yellow Pages publishers represent growing market segments that will present considerable opportunity for expanding local video ads, the company said in its U.S. Local Video Forecast (2007-2012).

"Publisher sales channels put Internet Yellow Pages in the strongest position to benefit from SMB and user demand for local online video," Matt Booth, senior VP and program director for The Kelsey Group's Interactive Local Media practice, said in a statement. "At the same time, local video growth will hinge upon [Internet Yellow Pages'] execution of sales and video networks' distributed production and fulfillment."

Video offers general appeal and simplicity compared with other online ad tools and is favored by new advertisers who don't otherwise buy ads for Yellow Pages, according to the report.

The Kelsey Group said that 62% of consumers surveyed in its User's View Study in March reported watching online video ads, compared with 59% in 2007. More than 47% of consumers who watched an online video ad visited a Web site, and 19.1% sought information about a product or service. More than 18% visited a store to see a product, and nearly 17% of those who watched an online video ad bought something.