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Average rates for pre-roll online video ads dropped 25% in 2008's fourth quarter compared to 4Q07, according to video ad firm BrightRoll.

From Q3 2008, rates fell 12.5%.

Actual average CPM figures were not provided, by online video CPMs typically run between $20 to $25, MediaPost estimates.

Pre-roll is also said to remain the dominant video ad format, accounting for 83% of campaigns in 4Q08 versus 63% last year.

"Pre-roll tends to outperform on nearly every metric tracked by advertisers–duration viewed, click-through rate, cost per view, brand lift and change in purchase intent," BrightRoll claimed.

Through 2008, online video ad rates were expected to decline as inventory increases and more professional content appears on the web. Economic recession only quickened the fall.

But BrightRoll remains optimistic. "Fundamentally, online video ad inventory has been (and continues to be) overpriced," the report stated.

"As agencies' video ad budgets have grown to millions of dollars, there has been significant pressure (and success) in pushing online video CPMs to converge with rates paid on television. We believe this is good for the category, as it will bring significantly more total dollars into the medium."

A separate report from eMarketer projects online video advertising will increase 45% in 2009 — to $850 million. In an encouraging nod to those figures, a recent PermissionTV survey of marketing executives found online video will be the primary focus of ad campaigns in 2009.