In the process of improving their market share, they have indirectly helped Google Video, because they work together. By itself Google Video accounts for barely 4% share of the market.

YouTube’s positive growth has obviously occurred at the expense of other sites. Their nearest rival, MySpace, which commanded a healthy 16% of the market last year, has fallen to just about 9% this May, while even Google Video has fallen from 7.8% to 3.73% in the space of one year. Yahoo! Video, which was always a small player, holding only 2.77% of the market share last year, has fallen to just 1.92% this year.

In fact Veoh, which has the smallest market share in the top 5 category, is the only one other than YouTube, to have shown a positive move from 0.86% to 1.13% which is almost 32% better than their performance last year. This must be at least part of the reason why television network ABC have recently decided to enter into a distribution deal with them.

Further information from Hitwise shows that the total number of people visiting video sites has reduced by 9% compared to last year, and presently accounts for only 1.14% of all visits to the Internet. At the same time, those who do visit the video sites, seem to be spending more time there, as there has been an increase of 6% in the total number of hours that are being spent, watching online videos. 82% of YouTube clients, and 64% of MySpace clients, have been going back to the same site repeatedly.

Whether YouTube’s huge lead in the video market will stifle creativity and innovativeness remains to be seen.

The screenshot below show the search engine results page when a US-based user searches for a cell phone. On the right hand side, the Blackberry ad includes a + sign with a link saying “Watch demonstration”.

Clicking on the link drops down a small movie pane and a video starts automatically playing within the same page, not in a pop up window nor in a new layer.

The video quality is exceptional as is the sound. The technology used here seems to be similar to the video technology that powers YouTube. The video clip lasts 29 seconds.

The video ends with a button including a link to the landing page on the advertiser’s website. Clicking this link or the title of the ad takes users to the regular website, just like any other sponsored link does. The big difference, though, is the additional branding opportunity that including a video within the ad space offers.

This will revolutionise the search engine advertising industry, as advertisers will now need to think of even smarter and more creative ways to reach consumers. Large brands will benefit from this much more than small businesses, though, as SMEs will not typically have the budget to shoot good quality video commercials for their search listings.

Google has not currently provided any further information on the number of such video clips it will allow on a single search results page. Normally one would assume that they would cap this at a handful of advertisers, because having ten demos on a search results page might not lead to a great user experience.

Screenshot of video ad playing in the regular Google search results page