Online video services in China hit the news in a big way this month when the two leading online video sites by market share,Youku and Tudou, announced plans to merge.

According to data from Analysys International, Youku and Tudou accounted for a 35.5% share of all online video ad revenues in China in Q4 2011.

The research firm estimated that total online video ad revenues in China totaled RMB1.69 billion ($261.6 million) during the period. The two sites’ combined total video ad revenue was approximately RMB600 million ($92.9 million) during the quarter.

On March 15, Ad Age opined that the merger would “give the combined company powerful influence in setting prices for online advertising.” But declarations of an online ad monopoly may be a bit overblown. According to Q4 2011 total online ad market data from Analysys International, Youku had only a 2% share of China’s overall online ad sales, while Tudou didn’t register enough to make the ranking.

Online video revenue in China is on a solid growth trajectory, more than doubling in 2011, according to Analysys International, and the same is expected for 2012. While a merger between these two companies creates a major player in the market, it won’t determine winners and losers in the long run. China’s ad market, both online and off, is undergoing rapid change and is extremely volatile. One thing is certain, however: continued growth across the board.

Both Youku and Tudou are publicly traded companies listed on the US-based NASDAQ. The all-stock merger may not be completed until mid-2013.