Online video advertising is finally making an impact on the digital space. Of the $28.5 billion that eMarketer predicts will be spent online next year, video advertising—as it hits almost $2 billion—will be the most dramatic growth story. Video spending has always accelerated faster than other online ad formats, but this may be the first year that trend will have demonstrable results.

Video ad spending will achieve the highest gains in market share among the formats. While other formats remained fairly static, video alone will double from a 5.5% share in 2010 to 11.3% in 2013, new eMarketer estimates show. And spending for video ads will continue to escalate at a furious clip in 2011—39% compared with 11% for banner ads and 10% growth for search.

One reason for the huge increase in video ad spending is that brand marketers will shift more of their ad budgets online. Since there is more professional video online than ever before, buyers have more inventory to choose from.

Brand marketers realize how central the internet is to consumers’ lives than it was even two years ago. More important, they see how much of that video content is professional, so they trust it and as a FreeWheel study shows, consumers tend to watch video ads to the end when they are up against professional video content.

For most brands—particularly the often traditional consumer goods marketers—perception is everything and the content that their ad runs up against is very much related to how the audience will perceive their brand. So, when it’s content that the audience already knows (like TV shows) they can be sure their brand image will not be tarnished.

Will the shift in ad dollars come from TV? I wish I could say for sure. TV is certainly not declining. It’s growing in solid single digits, according to eMarketer’s comparative estimates. Some industry watchers say that the dollars for online video ads are still shifting from TV, others say it is shifting from print.

But I predict that a major key to the shift into online video will come from the rich consumer goods companies because that ad format gives them more of what they need for branding than any other online format. As important, advertising against professional video content is the most comfortable parallel to the way they’ve been advertising on TV. Twenty-one of Ad Age’s 100 Leading National Advertisers are consumer goods brands, and those 21 spent over 22% of the entire pool of measured media advertising, according to our analysis of the Ad Age data.

That’s not to say the Unilevers and Procter & Gambles of the world will get the internet religion wholeheartedly. Consumer goods brands tend to be conservative, and they will continue to tread carefully and experimentally. But they will continue to spend. After all, for brands with such large ad budgets, a little bit goes a long way. Further, consumer goods brands need to market the brand, since in most cases their products are interchangeable.

Online video CPMs tend to be more expensive than TV CPMs, or even cable. But video ads online also tend to be more targeted. Marketers are not reaching a mass audience of millions as they would on TV. Instead they are reaching a focused, engaged audience. There is less of an ad load online, so people tend to sit through the ads, rather than flipping channels or taking a snack break as they would with TV.

Better still, there is a higher completion rate for watching mid-roll ads compared with preroll and postroll, according to FreeWheel. Why? A consumer has already committed to watching the content, so they might as well watch the ad. Most surprising, half of the post-roll ads served are viewed to the end. With TV shows nowadays, both online and on the tube, you never know what scintillating little bit of content from the show might follow the ad.

There are three caveats to all this great growth news.

With more and more content pouring online from the TV networks, Hulu Plus and possibly Google TV, growth seems certain. Don’t forget, though, these entities are still quite new. They may falter, or fade away and video ads will not grow at the same rate.

In addition, the growth of Netflix in particular, as well as Apple TV, point to a huge quantity of digital video content that will be subscriber-based or pay-per-view, and therefore creates no video ad inventory.

Bandwidth limits are another problem. If large ISPs, which are predominantly cable companies, start to meter bandwidth, consumers will become more picky about how much video they view. As they become more selective, that could decimate the amount of video inventory available.

If those caveats don’t come to pass, the future holds huge promise for digital video. There will not only be a surge in video on the internet, but an explosion of video everywhere. People will watch online, on their iPads, their smartphones or internet video streamed through the TV. And marketers will buy those ads in packaged deals across screens.

The Procter & Gamble Company raised some eyebrows with its January announcement that it would sell CPG products directly to consumers via a new Website. But P&G maintains that its eStore is a learning lab, one of the many groundbreaking test concepts it has launched over the past several decades.

We spoke with Glenn Williams, External Relations Manager at Procter & Gamble, about the new eStore and some of the strategies and expectations behind the concept. (Read more…)

Clark Reinhard of Procter & Gamble describes the integrated marketing and media strategy for launching the Scope Outlast product line, which includes online video consumer testimonials and multimedia tie-ins with “American Idol” host Ryan Seacrest.

eMarketer: The brand is partnering with Ryan Seacrest on promotion. Why?

Mr. Reinhard: He has such a broad appeal and we’ve worked with him for a few years. We recently debuted our TV commercials on his Website, RyanSeacrest.com, and he tweeted to his fans to watch the commercials.

eMarketer: What role do digital media and marketing play in this launch?

Mr. Reinhard: We have homepage takeover banners, online video testimonials and a downloadable coupon offer. We’re continuing to increase our investments in digital and particularly on this initiative. We cannot disclose our media spend, but digital is an important part of our overall holistic program.

In addition to our Website, we’ve done outreach to bloggers and keyword search. We’ve also deployed online ad units. For example, the expandable unit offers consumers the opportunity not only to learn about the products, but the ability to see what people who have tried the product think of it. The ads bring a bit of the Website experience to them so they don’t need to go to our brand site to learn about the product.

Our Pour unit shows two horizontal and vertical units on the same page. Together, they deliver the full message as liquid from the horizontal unit pours into a bottle, which is the vertical unit. We’re innovating in how we use our ad units. You can then click through to see the videos and still see your e-mail. The ad units aren’t interrupting the consumer’s experience.

eMarketer: Are there any media buys so far on “American Idol” or Ryan Seacrest’s radio show?

Mr. Reinhard: We are featuring Ryan in our advertising, on our Website and his, in FSIs [freestanding inserts] and also for events and appearances. We are always looking for cross-promotional opportunities to support our brand and the Seacrest properties.

eMarketer: The ad campaign includes TV, print, online, sampling and point-of-sales media. What sorts of online destinations are you targeting?

Mr. Reinhard: We are launching with different spots for Scope Outlast mouthwash and Crest Extra White plus Scope Outlast Toothpaste on national network and cable TV spots. Online, we are focusing on social networks, blogs and the sites of womens’ fashion/beauty magazines such as Marie Claire and Redbook, as well as entertainment sites such as MTV, People and Bravo.

The full version of this interview is available here, to eMarketer Total Access subscribers only. Every day they have access to new interviews with digital marketing leaders and trendsetting entrepreneurs.