With the incredible rapid growth that online video sharing and video search sites are realizing, more and more advertisers are pumping money into video advertising. According to the latest research, online video advertising revenues in the US are expected to reach $7.1 billion by 2012 which is a 72 percent compound annual growth rate for the next five years. In 2008, the projections are just shy of $1billion.

Since video sites have been realizing more and more traffic growth, they have had a unique opportunity to innovate and test various different online video ad formats. And the advertisers as well are more than happy to experiment as they are looking to these leaders to develop the most effective online video advertising formats. Traditionally, pre-roll, mid-roll, or post-roll ad formats (aka in-stream ads) have been favored by advertisers due to the availability of inventory and prominence of the advertisement itself.

Pre-Roll Video Ads: Pre roll advertisements start before the video begins and the viewer has to sit through the entire advertisement, if he does not want to rely on chances, rather wants to ensure that ha can watch every single second of the video from its beginning.

Post-roll Format – In post-roll, just like the other in-stream ad formats, a short clip is played and streamed within the player at the end of the video stream itself. This is not as desired by advertisers as they know that many users never watch a video all the way until the end.

Mid-Roll Format – With mid-rolls, a short clip is streamed in the middle (sometimes every X minutes) of video content that is playing. This tends to be less annoying to users as they are acustomed to this format in television advertising.

Some of the video sites have started experimenting with different formats like, in-player banners: In-player ads sometimes include relevant text or image advertisements in the space available in video player between the outer margin of the video and the inner margin of the video player.

The buzz in the past year has been with regard to a newer method of video ad delivery that attempts to match relevance by choosing video ads to run with only video that is similar in subject. This is known as contextual video advertising and it can take on a range of different formats with images or text being displayed within a portion of the video window, only being activated when clicked on.

Some of the video sites like to go through the video and include only relevant in-video text advertisements, which match the contents of the video and at the same time it does not disturb the process of video watching by the viewer. Youtube was one of the first sites to adopt this format as a standard and it is called Overlay Video Ads.

Although there are a few other formats that are being tested and utilized, the formats that I covered are the most commonly used formats at the moment. That being said, with the attention on this sector as it is, we will likely continue to see rapid innovation and will keep our eye out for the next best online video ad format.