From BusinessWeek - “Online Video Ads: Just Wait” :

Video ad sales are expected to grow from an estimated $775 million this year to $3.1 billion in 2010 and then to $4.3 billion in 2011. […]

It’s after 2011 that the floodgates will really open, says eMarketer senior analyst David Hallerman. By then, the distinction between television and Web video will be so blurred that advertisers will begin directing more of their marketing budgets to the online version.

BusinessWeek goes on to look at some of the ways that online video advertising is changing today… and where it might go in the future.  And a lot of signs are pointing to an explosive future for online video.

If you recall, I talked about a contextual video advertising platform rolled out by blinx a couple of weeks back. The system blinx has created, called AdHoc, can display any number of ad types (including both in-video and proximal) based on the content of the video.

Google is offering up to $400 AdWords credit to advertising who embrace video as a medium. As Matt suggested, it’s highly likely that Google is trying to beef up its video ad offerings. And according to the BusinessWeek article, Yahoo! has been experimenting with a different form of video ad that can be pulled up and down over a video like a window shade.

Television networks are slowly starting to embrace online video. Many shows are now available online. Even more have online components that include extra video footage, video diaries from characters, etc. Movies are making their way online as well. Netflix, Vongo, and others offer subscription-based video services. Could ad-supported versions be far behind?

That being said, $4.3 billion is a lot of money… and 2011 isn’t that far away. $4.3 billion would represent a more than 5.5 fold increase in ad spend in just 4 years.

But I think it’s totally doable.

Apple is already streaming computer-based video into the living room. An announcement today says that Microsoft is rolling out its Windows Home Server, which has a similar funcionality. More and more computes - especially laptops - are shipping with the ability to hook directly into a television or tuner.

You can’t deny the rise in online video or the bleed-over from traditional television that’s already begun. So can online video advertising snag $4.3 billion by 2011? Television advertising is expected to reach $46 billion in the same year. We’re basically talking about a little less than 10%, here.

My prediction: online video advertising will meet or exceed these predictions.

There’s only one catch - better advertising options must be developed and WIDELY distributed. I don’t care about a few niche companies running their technology on a couple thousand video clips. I’m talking about formats… technologies… something… that can be widely distributed to the major video players.

Until a viable, scalable advertising option is developed that doesn’t tick people off (and hamper the growth of online video at the same time), I don’t think we’ll see the full potential of online video exploited. And without the video to run ads against, advertisers will simply invest their money elsewhere.