It is official, video advertising is the new darling of the online industry.

The growth of video has been spectacular. In 2005 video advertising accounted for a scant $121 million in spending. In 2006 that figure grew by 82%, to a respectable $410 million. In 2007, that figure is expected to reach $775 million; accounting for 4.2% of total online advertising spending. For 2010 the figure is projected to reach $2.9 billion or 11.5% of overall online advertising spending.

Many attribute the meteoric growth of video advertising to a handful of key factors including 1) the rapid adoption of broadband, 2) the coming of age of the Generation Y (those born between 1980 and 2000) and, 3) the rise of consumer generated content and the need to align advertising models closer to content and choice.

The reality is that broadband has had an important but not significant impact on video advertising. There is a significant difference between “lean forward” and “lean back” viewing habits, irrespective of the accessibility of content. These habits are rapidly changing. In a reverse of fortunes, internet browsing is becoming more “lean back” and content is consumed in a more relaxed fashion, while television is becoming more “lean forward” as consumers are engaged in digital interaction within their DVRs and enhanced tv setboxes.

The growth of “lean back” behavior online will only be fully realized when quality content is available and delivered in a meaningful context – placing content producers such as Viacom, video distribution networks such as Brightcove and Voxant and advertisers at the centre of this change.

Furthermore, the myth video advertising is driven by teenagers and adolescents can no longer be supported.

According to Nielsen NetRatings, one-third of YouTube’s audience is more than 45 years old. This view is further supported by a Nielsen Net Ratings study entitled Who´s really searching for online video in the UK? The study indicates UK young couples without children are twice as likely to be responsible for click through/view of a video than a click-through across the Internet.

However the behavioral change being driven by a generation “born to be digital” cannot be underestimated – the average teenagers weekly media consumption places online at the centre of their lives, spending an average of 16.7 hours online (excluding email), 13.6 hours watching TV and 12 hours listening to the radio.

More important than the current usage of online, the residual impact of online on Generation Y’s ascent into adulthood is key – an opportunity few companies can afford to miss. Successful marketers should embrace a simple but effective truth of marketing - today’s consumer is tomorrow’s customer. Establishing a rapport with the “born to be digital” demographic today could reap substantial benefits in the long term. However this is unlikely to occur given the majority of marketing directors have a finite “mandate in office”, similar to that of a president or prime minister.

Undoubtedly, the growth and true adoption of video advertising is being plagued by the old question of choice. Choice within traditional media is almost non-existent; with networks and publishers dictating advertising schedules and ad rotations. To date online is yet to deliver on the promise of choice. Ninety percent of all video advertising is sold on a 3, 10 15 or 30 second pre-roll basis, with the advertising message being delivered before the content. This is unlikely to change and unfortunately will take us down the same slippery road as pop-ups (although options for mid roll: during content and post roll : after content exist).

Recently the IAB defined a set of guidelines for the use of On Demand Video. While these guidelines define an approach for the delivery of video advertising, they fail to establish quantitative and qualitative guidelines for the measurement of video advertising’s impact.

The challenge for video advertising is not the lack of delivery guidelines or the availability of technology to deliver it. The promise is the amount of quality content that can be directly chosen by consumers and appropriately measured by marketers.

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