Many market forecasts have attempted to size the U.S. online video market, which consists of ads that are tied to a growing subset of online music, sports and entertainment clips. These forecasts project the market will grow to between US$4 billion and US$7 billion by 2012.

A TKG forecast released yesterday specifically breaks out the local portion of this. The popularity of online video has trickled down to the local level in the form of small and medium-sized business video advertising that accompanies local listings and business profiles.

Specifically, opportunity exists in the increasing segment of video production companies targeting SMBs, and growing interest among Yellow Pages publishers in adding video to their local sales bundles. Here are a few examples of what this looks like:

New York Pizza

Chicago Aquarium

California plumber

Bronx Auto Glass Shop

Providence Restaurant

Reception so far has been positive, given the general appeal of video and its simplicity when compared with other forms of online advertising (e.g., pay-per-click). Local online video for small businesses also combines the traditional appeal of television advertising with the distribution efficiencies and advantages of the Internet. For users, video in the local search environment complements listings and is watched in “lean forward” mode, as a way to assist purchase decisions and add color to listings.

Demand for video at the local level will drive Internet Yellow Pages to execute tighter sales and fulfillment. The medium’s favorable margins will further compel publishers to embrace it as a means to offset print revenue declines. For Yellow Pages publishers, it also represents an opportunity to appeal to a new set of advertisers they haven’t traditionally reached — the better part of the addressable market of 15 million SMBs in the U.S.

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Related: A local video session is slated for TKG’s September Directional Media Strategies conference:

The Online Video Opportunity
Video is fast advancing as a key element of the local online advertising mix, and Internet Yellow Pages providers are jumping in with their own products. This session will explore the emergence of online video on IYPs and examine its potential growth trajectory.