YouTube: crisis a boon to online video ads vs TV

DAVOS, SWITZERLAND: The online video advertising market will emerge a winner from the global economic downturn as firms seek cheaper and more precise ways to promote their products, YouTube's co-founder said on Friday.

Chad Hurley, chief executive of the business which is now owned by Google Inc, said rapid growth in demand for online video meant his website was tapping larger and commercially more valuable audiences.

YouTube has grown quickly to become the world's largest online video site, boasting a bewildering array of content from teenage pranks to programmes from Pope Benedict and U.S. President Barack Obama.

Hurley said the site received more than 15 hours of video content every minute and the rate of postings continued to rise.

"The market for online video is reaching critical mass. Some of these audiences are similar in size to what you can reach in television programming," he told a panel at the annual meeting of the World Economic Forum.

"In a world like today, where we have economic crisis, people are making smarter decisions about how they are spending their money," he said.

"They are going to move it from something (television) that isn't as measurable ... and get it in front of an audience of the same size for a fraction of the cost."

Overall advertising spending is expected to fall significantly this year as global recession bites but digital should hold up better than traditional media, Maurice Levy, chief executive of French advertising group Publicis, told Reuters earlier this week.

Hurley did not quantify YouTube's advertising growth rate but he said it was testing various advertising models, including traditional broadcast practices like commercials, as well as pre-rolls, or short promotions played before a clip.

"You have to experiment," he said.

A growing number of users are now using smart phones, like Apple Inc's iPhone, to watch YouTube clips on the move, a trend which Hurley said would accelerate as mobile Internet technology and bandwidth improves.

The growth rate for mobile YouTube use is higher than for the website itself, he said.