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AOL Unseats Google in Video Ad Views

Over the past few years, the online video advertising market has been growing, drawing major online players to tap into the growing space. As the competition has heated up, some surprising moves have occurred -- most notably AOL (UNKNOWN: AOL.DL  ) surpassing Google (NASDAQ: GOOGL  ) last month for total online video ads viewed in the U.S.

Watching online ad viewership skyrocket
In a new report released this week, comScore said that AOL delivered more than 3.7 billion ads in the month of September, compared to Google's 3.2 billion. AOL was able to gather online video ad views from almost 50% of the U.S. population, while Google captured more than 36%.

Last month was the first time AOL surpassed Google, made possible by AOL's acquisition of the online video advertising automation market place Adap.TV. AOL finalized the $405 million deal last month, which allowed the company to combine its own online video ads with Adap.TV's to surpass Google. 

AOL also dominated Google in total video ad minutes viewed: 1.6 billion for AOL, compared to 320 million minutes for Google.

But despite AOL taking the top spot for video ads viewed and total time, Google still surpasses the competition for total video content with 165.4 million unique U.S. video viewers in September, while AOL had 61.8 million.

More viewers are great, but more revenue is better
Despite AOL's growing significance in the online video advertising market, there's no contest when it comes to Google's video ad revenue. Morgan Stanley estimates Google's YouTube will do $4 billion in gross revenue this year and $711 million in operating income. By 2020, Morgan Stanley expects operating income to hit $5 billion. Though YouTube makes a small percentage of revenue from other services like subscriptions, the vast majority still comes from its video advertising. You can compare those numbers to AOL CEO Tim Armstrong saying the company hit about $100 million in annual online video advertising revenue last year.

Investors should watch for both Google's and AOL's growth, as well as online video ad newcomers like Facebook. In the first half of this year, online video advertising was estimated to bring in $1.3 billion in revenue for companies -- and it's only moving upward. I wouldn't bet against Google in this space, even if the competition is making headway. Despite AOL's skyrocket to the top of online ad viewership, Google is already making the most money from its online video ads, and with YouTube's massive amount of content, the company stands to make the most gains from online video advertising's growth. 

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