IPTV: Who Will Pay?

According to MultiMedia Intelligence, about $24 billion will be spent for advertising on the Internet this year. You may find that to be surprising, but how about this? Of that total, about $1.6 billion will be spend on US Internet video advertising. One dollar out of ever 15 spent on Internet advertising will go for video. I find that to be a stunning figure.

If this turns out to be true, then it looks as though advertising may indeed be a viable model for financing video on the Internet. It appears to be working for Joost and the broadcast network sites. And this is in spite of the success of pay-to-download services such as iTunes that offer episodes without commercials. It appears that many American consumers choose the “if it’s free, it’s for me” shopping mindset.

Now, before we get all excited about this development, let’s put it in perspective. The total advertising expenditures for television in the U.S. in 2006 was $72 billion (according to the Television Bureau of Advertising), about 25% of the total $282 billion spent on advertising overall. So two years ago, traditional television got about 45 times as much advertising revenue as IPTV is forecast to receive this year. However, IPTV is just getting its legs under it, and probably has less than 1/45th as much programming as broadcast TV.

No matter how you slice it, however, it appears that advertisers are willing to place at least some of their bets on Internet television. And that means that we’ll probably get a growing number of choices in 2008. And that can only be a good thing.