June 2008 | Download PDF

The Point

Video V2.0

View Point

In January I wrote about the trends our analysts were seeing in the video and streaming media space. As you may recall, Yellow Pages Group had just announced the addition of video to its product set, and TurnHere had just signed a deal with Yellowpages.com.

Since then, we’ve continued to see the acceleration of small and medium-sized businesses’ adoption of video as a means of both demonstrating their unique value proposition and offering prospective customers an engaging and textual way to learn about their business. In our discovery process, our analysts have discovered that SMBs are increasingly interested in learning more about video offerings. In many ways video might be the product that triggers an ever-faster reallocation of SMB advertising budget from offline to online.

Data Point

This week we issued The Kelsey Group’s five-year revenue forecast for U.S. local video advertising. Analysts Matt Booth and Mike Boland have built a forecast that shows local video will be a $1.5 billion market in the United States by 2012. Their analysis indicates video has the potential to deliver gross margins comparable to those publishers receive from offline print advertising.

We live in an increasingly visual age with multimedia engaging consumers across demographic categories — young and old, rich and poor — and people streaming media on their TVs and computers and increasingly on their mobile devices.

In January’s Chief Executive Outlook, we ran a poll asking you whether video would be a game changer in the local media market in 2008. CEO readers responded as follows: Strongly agree 20.6%; Agree 23.7%; Not sure 33.6%; Disagree 14.5%; Strongly disagree 7.5%.

Increasingly we at The Kelsey Group believe video will be a game changer.