One of the more interesting revelations of 2008 is the diversity of online video formats.  We see demand ranging from silent 15-second product clips (the “low cost, high volume” approach) all the way up to fully produced “web commercials”.

The tanking economy forces retailers to examine their ROI across the board.  In 2009, look for increasing measurement and accountability in online video — which will also mean less “one size fits all”, and more unique approaches to connecting with consumers.

Here are some highlights from the article, Web Sales Tactics: Virtual Salespeople and Zombie Videos:

From rings on QVC to toys on Amazon, retailers are increasingly using video to sell their products on the Web.

BabyEarth Missing that human contact at Internet shops? Employees at BabyEarth’s flagship store in Texas wear head cams to give online shoppers a more personalized experience.

They’re just giving the people what they want: In September, 32.6 million unique users watched video on a retail Web site, up 20 percent from a year earlier, according to comScore.

Videos offer shoppers a chance to virtually poke and prod the product before they decide to buy it. And, in the case of apparel, to see how a garment looks on.

“It’s the classic, ‘Does that make my butt look big?’” says David Fry, who’s e-commerce company Fry has built video platforms for clients such as Tassimo, the coffee-maker division of Kraft, and teen retail chain Wet Seal.

Really, it’s great for any kind of a product that you want to touch, Fry says. With handbags, for example, video allows you to see what the pockets look like, what the lining looks like, is there a zipper or snap, etc.

And, retailers are taking the cue: 43 percent of retailers surveyed by Shop.org said they planned to add or improve the use of video on their site.

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Video raises the number of sales for featured products 30 percent on average, according to testing performed by Innovate Media, a California-based online video production company. “We’re seeing client after client with incredible video conversion rates, ranging from 12 percent to 115 percent with the average being 30 percent,” said Innovate Media President John Cecil.

…

the question for ecommerce merchants isn’t whether video works to drive conversions, but how to overcome production aspects, which is the biggest barrier for the average online seller.

Until now there have been very few resources for actually producing the videos,” said Cecil, whose firm charges $1,000 to $50,000 for production of online videos. “Most of the merchants delivering videos to agencies for distribution aren’t producing it ‘lights, camera, action’ themselves. They come to video production houses like ours with the product they want to sell online, and we produce a video around it. Then, once we started talking about production and delivery in the same breath, it totally changed our business.”

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Raj Gajwani is the founder & CEO of SilverDock. Raj previously co-founded WiseConnect, a venture-backed maker of software for retail store merchandising. As CFO and COO of WiseConnect (sold to BayLogics in 2001), he ran operations, finance, and strategy.  Raj also served as Director of the Data & Research product lines for KnowledgeStorm (sold to TechTarget in 2007), a venture-backed online marketing startup based in Atlanta. Raj started his career as an analyst at Morgan Stanley, where he did strategy consulting and corporate M&A as part of the corporate Strategic Planning Group. Raj graduated Cum Laude in Economics from Harvard College.

SilverDock.com is a leading producer of online video for retailers and Internet marketers. These Shop.org TV interviews were conducted at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008.

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Bernardine Wu is the founder and CEO of FitForCommerce, a business which resulted from her many years of operational and strategic success in helping online retailers find solutions and redesign and redeploy new or enhanced webstores.

Bernardine is also a co-founder and Board Advisor of SiteAcuity (www.siteacuity.com) which provides online marketing, sales and contact center technology to increase marketing intelligence and human touch to online businesses. She advises the company on business development and corporate strategy.

Before joining SiteAcuity, Bernardine served as the president and chief operating officer at Venda, Inc., a leading provider of outsourced eCommerce platforms, overseeing finance, marketing, business development, and operations for the company. As a co-founder of Venda, Inc., she had key responsibilities in the strategic planning and execution of Venda’s launch and growth in North America. Clients included: Lands’ End, Neiman Marcus, Crabtree & Evelyn, UnderArmour, Pokemon, MarketExpo and DoItYourself.com.

Prior to founding Venda, Bernardine was an independent consultant focusing on executive-level projects and business strategies tied to increasing revenues, restructuring costs and maximizing organizational efficiency at a variety of institutions including the New York Stock Exchange. Before that, Bernardine managed business development, marketing, PR, and the B2B eCommerce business unit at OptiMark, Inc., a provider of advanced matching engine and exchange technology. Bernardine also held senior technology and operations management positions at brokerage firms Salomon Brothers and Jefferies & Company.

Bernardine has extensive finance, technology and eCommerce experience rooted in Wall Street and a successful history working in the eCommerce technology industry as a consultant for Accenture. Bernardine received her BA in English and Asian Studies at Dartmouth College.

Shop.org TV interviews were conducted at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008.

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As Shop.org’s Vice President of Content and Education, Joan Broughton oversees speakers, format, content, and networking for all Shop.org conferences, retailer-only workshops, tele-seminars, and regional events and meetings. She also manages all Shop.org research and publications as well as virtual community initiatives. Shop.org is a division of the National Retail Federation, the world’s largest retail trade group.

Before joining Shop.org, Broughton was Vice President, Multi-Channel Programs at REI where she managed website operations and REI Adventures. The business units she managed generated annual revenue of more than $100 million and included a team of 200 people. She was responsible for launching REI’s “order online, pickup at a store” option for customers and implemented a number of web services for REI customers.

Prior to REI, Broughton worked with Office Depot where she was Director of Web Publishing and has spent more than twelve years in the online and Internet industry including roles at O’Reilly & Associates and America Online. A native of Boston, she received her Bachelor’s degree in Classics from Brandeis University.

Shop.org TV interviews were conducted at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008.

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When Google wanted to explain online marketing to the top brands in the world (including Wal-Mart, Costco, Sears and Sephora), they brought Mitch Joel to the Googleplex in Mountain View, California. Marketing Magazine dubbed him the, “Rock Star of Digital Marketing” and in 2006 he was named one of the most influential authorities on Blog Marketing in the world. Mitch Joel is President of Twist Image – an award-winning Digital Marketing agency. He is a marketing and communications visionary, interactive expert, community leader, Blogger and Podcaster. He is also a passionate entrepreneur and speaker who connects with people worldwide by sharing his marketing insights on digital marketing and personal branding.

Joel is a Board Member for the Canadian Marketing Association, an executive for the National Advertising Benevolent Society of Quebec and an instructor of the CMA eMarketing professional certificate course. He is also a former Board Member of the Interactive Advertising Bureau of Canada.

Joel speaks frequently to diverse groups like The Power Within, Starbucks, Google, Unilever, Shop.org, Visa, Microsoft and has shared the stage with former President of the United States, Bill Clinton, Anthony Robbins and Dr. Phil. He is also the founder/moderator of the Montreal Business Book Review and host of the HarperCollins Canada sponsored, Foreword Thinking: The Business And Motivational Book Review Podcast.

He co-launched Distort Entertainment, the only hard music label in Canada to have major label distribution (Universal Music) and whose roster features the platinum-plus, Juno Award and MuchMusic Video Award-winning acts, Alexisonfire and City And Colour.

Joel is frequently called upon to be a subject matter expert for CTV National News, Canada AM, CBC Newsworld, Marketing Magazine, Strategy, The Globe & Mail, The National Post and many other media outlets. He is presently writing his first book, Six Pixels of Separation (Fall 2009 - Grand Central Publishing – formerly Time Warner Books) and his newspaper business column, New Business – Six Pixels of Separation, runs bi-monthly in both The Montreal Gazette and The Vancouver Sun.

Shop.org TV interviews were recorded at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008.

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Litle & Co was founded in 2001 by payment and direct marketing industry leaders. Litle & Co. is the only independent payment processing company focused exclusively on direct marketers.

Tom Litle brings 20 years of business development, corporate management and payment processing experience to Litle & Co. Tom is responsible for all aspects of the Company’s day-to-day operations.

Prior to Litle & Co., Tom was Founder and General Partner of Industry Ventures. While at Industry Ventures, Tom raised and invested three venture funds in over fifty companies and was responsible for sourcing, negotiating and managing venture portfolios purchased from corporate investors including Enron, EDS, and InfoSpace. Tom founded Industry Ventures in 1999 after founding and serving as President of OrderTrust, the first large scale transaction processing network focused on end-to-end order management in support of direct and multi-channel merchants. Tom has served on the boards of multiple early stage companies and is an active advisor to many entrepreneurs and venture investors. He earned his BA from UC Berkeley and his BFA from the Rhode Island School of Design in 1988.

Shop.org TV interviews were recorded on Sept 15, 2008 at the Shop.org Annual Summit. Shop.org TV was produced by SilverDock.com, producers of Internet video advertising and video merchandising for online marketers.

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Larry Joseloff is currently the Vice President of Content for Shop.org where he is responsible for constructing the content and recruiting speakers for Shop.org events. Larry also helped launch the Shop.org blog which has quickly become a popular communication tool for the Shop.org community.

Prior to joining Shop.org, Larry served as Marketing Manager for The Discovery Channel where he directed the online affiliate program, along with managing the shopping comparison sites and portal relationships for the retail stores.

Previously, Larry served as a Program Manager at Be Free/ Commission Junction where he managed affiliate programs for clients such as Expedia, eBay, Gateway Computers and Verizon Wireless. Before joining Commission Junction, Larry was the Manager of Interactive Services for four years at The Electronic Newsstand (enews.com) – the Internet’s first magazine retailer.

Shop.org TV was recorded at the Shop.org Annual Summit on September 15, 2008 in Las Vegas.

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Brett is the Founder and CEO of Bazaarvoice, where he is responsible for guiding the company’s strategy and overseeing day-to-day operations. Brett is a seasoned executive widely recognized throughout the online industry for turning groundbreaking ideas into leading businesses.

Brett serves on the Board of Directors of Shop.org, the leading non-profit industry association for retailers online and a division of the National Retail Federation, the largest trade organization for retailers. This is his second term on the Shop.org board, where he previously served for two years. He also serves as an Entrepreneur-in-Residence at the Wharton School and served as a Board of Advisors member to the non-profit Web Analytics Association. Brett actively advises several early-stage technology companies. He is an inventor (US Patent #7,050,989) and a regular speaker at various industry events and universities.

These Shop.org TV interviews were conducted at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008. Produced by SilverDock.com, specialists in online video for retailers and marketers.

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Brian is responsible for the strategic direction, performance, and team management at Alibris. Brian has previously been Alibris’s COO and led its sales and marketing functions. Prior to Alibris, Brian worked with consumer products and retail companies for eight years with the Boston Consulting Group, focusing on e-commerce opportunities, growth strategies, and partnerships. Brian is a graduate of Northwestern University and Harvard Business School.

Shop.org TV interviews were produced by SilverDock.com at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008.

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Brian Platter is General Manager of Home Delivery for Peet’s Coffee & Tea Inc, a specialty coffee roaster and marketer of fresh, deep-roasted whole bean coffee for home and office. He joined the company in 2005 and is responsible for managing Peet’s online, call center and catalog business as well as supporting multi-channel marketing initiatives. Prior to Peet’s, Platter served as the Vice President of Product Management at Coremetrics Inc, the leading web analytics provider for online retailers. As the sixth employee of Digital Impact, Platter served as Digital Impact’s Director of Client Services and Vice President of Product Management from 1998 to 2000. Prior to 1998, Platter led product development efforts at Hewlett-Packard Company and consulting engagements at Gemini Management Consulting. Platter earned a B.S. in Mechanical Engineering from the University of Colorado , and an MBA from Stanford University ’s Graduate School of Business. Platter serves on the San Francisco regional advisory board for Shop.org.

Shop.org TV was produced at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008. SilverDock.com is proud to produce Shop.org TV.

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David “Selly” Selinger first garnered international recognition as an expert in the field of eCommerce data analytics and personalization with his groundbreaking work leading the research and development arm of Amazon’s Data Mining and Personalization team. In that role, David increased Amazon’s annual profit by over $50 million (25% of US profit, 2003) setting the industry standard for recommendation services.

David has decades of experience, from developing the first Javascript-powered ad delivery system for Flycast—the same technology used by Google AdSense, DoubleClick and Overture—to leading Overstock’s personalization efforts as Vice President of Software Development and Data Mining. David also cofounded Redfin, a venture backed, industry-leading real estate search/brokerage company.

David holds a broad collection of awards and standing patents in customer segmentation, analytics and data mining, including over a dozen pioneered at richrelevance. David’s accolades also include the coveted PC Magazine Editor’s Choice Award (won for 2Roam Wireless, acquired by Air2Web). David received his BS in Computer Science from Stanford University.

This interview was conducted on September 15, 2008 at the 2008 Shop.org Annual Summit. Shop.org TV was produced by SilverDock.com, specialists in online video for retailers and marketers.

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As vice president of Hosted and Consumer solutions, Doug Mack provides leadership for Software as a Service (SaaS) and consumer offerings for Adobe’s Creative Solutions Business Unit. Key products in his group include the recently acquired Scene7 On-Demand platform, Photoshop Elements, Premier Elements and the new Express solutions.

Prior to joining Adobe, Mack co-founded and was CEO of Scene7, provider of the leading on-demand rich media platform, which was acquired by Adobe in May 2007. Previously, Mack served as executive vice president of the Broderbund Home Division of Mattel. Mack also spent years at both McKinsey & Company and General Electric.

These Shop.org TV interviews were conducted at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008. Produced by SilverDock.com, producers of Internet video advertising and video merchandising for online marketers.

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Ellen Davis joined the National Retail Federation in 2002 and was named Vice President in 2008. She is responsible for helping shape NRF’s communications strategy, acting as a primary NRF spokesperson, and conducting analysis of NRF consumer research and industry trends.

In 2007, Davis was named one of the “15 to Watch” by PR News magazine, a top public relations publication. The award recognizes fifteen budding PR leaders and creative practitioners in the public relations field under the age of 30.

During her tenure at NRF, Davis has been responsible for evaluating NRF positions on a variety of retail topics including e-commerce, consumer spending, the economy, and loss prevention. By analyzing research from NRF division Shop.org, Davis identified a trend of consumers shopping online after Thanksgiving weekend and coined the phrase “Cyber Monday” for the Monday after Thanksgiving. Cyber Monday is now considered by the media, consumers and retailers as the official kickoff of the online holiday shopping season.

These Shop.org TV interviews were conducted at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008. Shop.org TV is produced by SilverDock.com.

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With RightNow since 2000, Jason leads RightNow’s global marketing efforts and is responsible for directing product marketing and management, as well as field and industry marketing, marketing communications, and corporate communications.

Instrumental in shaping RightNow’s strategy, Jason played a pivotal role in transforming RightNow from a niche eService player into a publicly held company, now recognized as the industry’s leading provider of on demand, consumer-centric CRM solutions.

Prior to joining RightNow in 2000, Jason held several positions at Intel Corporation, including product marketing, strategic planning, and management of OEM distribution channels.

Before his work at Intel, Jason served as director of internet marketing and business development at an online retailer, where he was also responsible for customer service and technology selection.

A frequently requested speaker, Jason has presented on the importance of delivering exceptional customer experiences at many conferences and events throughout the world.  As a key spokesperson for RightNow, he’s also been featured in numerous publications.

These Shop.org TV interviews were conducted at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008. Shop.org TV is produced by SilverDock.com, specialists in online video for retailers and marketers.

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John Ragals joined 360i in early 2006 with the mission to expand the agency beyond search organically as well as through product expansion and acquisitions both domestically and internationally. John is primarily responsible for overseeing the day-to-day operations and future direction of the agency’s five US offices. Before joining 360i, John was Senior Vice President and Group Account Director at Beyond Interactive with P&L and operational responsibility for Beyond’s relationships with Fortune 500 clients such as Cendant, Western Union, Nokia and 3M. Prior to Beyond, he held senior positions at webloyalty.com, a leading online direct marketer of membership clubs, and Modem Media, a pioneering interactive marketing strategy and services firm (now part of Digitas). John holds an MBA in Marketing and International Business from NYU and a BA in economics from Duke University. He is currently a Governor at Large for the Eastern Region of the American Association of Advertising Agencies.

Shop.org TV was produced by SilverDock.com at the 2008 Annual Summit of Shop.org, the leading trade association for eCommerce merchants.

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Clickbooth, The Exclusive CPA Network, provides advanced technologies complete with strong, exclusive channels, firm control on distribution and adherence to quality in terms of both publishers and advertisers. Clickbooth gives advertisers access to thousands of exclusive publishers and an extensive zero-risk environment with maximized ROIs. Additionally, publishers are guaranteed maximum returns and quality performance as well as the guaranteed highest payouts. With a focus on quality since its beginning, Clickbooth has been providing the advanced CPA (Cost per Acquisition) technology that is now leading the new phase in media buying for more than five years.

SilverDock.com produced Shop.org TV at this year’s Annual Summit in Las Vegas. For more information, contact SilverDock.

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Pinny Gniwisch started his adult life in Rabbinical College of Canada and graduated from Sydney University with a masters in Jewish law. Always appreciating a challenge, in 1995 he moved into his family jewelry business and spearheaded sales in the United States by securing business engagements with leading retailers such as Macys and Sears. In 1999 he went on to found ice.com where he has taken the reins of marketing and been responsible for developing strategic alliances with a variety of distinguished Internet companies. Since its inception, ice.com has risen in the ranks of successful online retailers, quickly reaching into the top 200 most profitable online retailers. Ice.com has grown over the past year by a solid 45%. And this year, 70% in the first quarter alone by focusing on creative ways to drive online traffic and sales. Names like Yahoo, AOL, MSN, MyPoints, Modern Bride — to name a few — have all entered into agreements with ice.com because of their belief in the product line and knowledge of the jewelry business, as well as Pinny’s track record of successful endeavors.

Pinny has consulted for such distinguished companies as Best Buy, Target and Victoria Secret on cutting edge internet marketing and merchandising. He has spoken for shop.org, etail, internet retailer and other major Internet industry events on vital online retailing topics ranging from search marketing, email marketing, personas, affiliate marketing, fraud, site design, blogs and customer retention.

SilverDock.com produced Shop.org TV at this year’s Annual Summit in Las Vegas. For more information, contact SilverDock.

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McAfee is the leader in intrusion prevention and security risk management. McAfee proactively secures systems, and networks, worldwide.

Shannon was interviewed by Natalie Pietrzykowski at the 2008 Shop.org Annual Summit in Las Vegas.

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Sally McKenzie is a retail and online industry veteran with over 20 years of leadership success spanning brick & mortar, catalog and e-commerce channels. Her extensive experience covers merchandising, marketing, product development, web site operations and strategic planning functions.

After beginning her career as a merchandise buyer for several brick & mortar retailers, Sally built and extensive 12 year career at Eddie Bauer, serving last as the company’s Vice President of E-commerce. In this role, she was responsible for the strategic direction, growth initiatives and all operational aspects of Eddie Bauer’s industry leading apparel website. During her tenure, she was twice honored with the company’s “Best of Bauer” award for innovation and profitable performance.

She then moved to the social networking space at Classmates.com, first serving as Vice President of Merchandising for New Business, then moving to Sr. Vice President, Marketing and Strategic Planning, where she was responsible for brand positioning, customer acquisition and retention, customer care and site design.

Following Classmates, Sally moved to Expedia where she first served as Sr. Vice President of Merchandising and Retail Operations, and laster as Sr. Vice President and General Manager of Expedia.com, with P&L accountability for the company’s $9 billion online business.

Sally holds a Bachelor of Arts degree from Washington College in Chestertown, Maryland and has served on advisory boards for Shop.org, Digitrends Magazine, The University of Washington E-Business Consortium and Internet Retailer Magazine.

In addition to her consulting work, Sally currently serves on the Board of Directors for Local Marketers, as Seattle based startup focused on local search marketing. She is an MBA Student Mentor at Seattle University, a volunteer at the Humane Society of Seattle/King County, and services on the Board of Directors for Jewish Family Service of Seattle.

Shop.org TV interviews were conducted at the 2008 Shop.org Annual Summit at the Mandalay Bay Convention Center in Las Vegas on September 15, 2008.

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Scott Silverman was named Executive Director of Shop.org in 2001. Previously, he had served as Vice President, Internet Retailing, for the National Retail Federation. He directs a number of internal and multichannel retailing initiatives and works closely with Shop.org’s Board of Directors, a committee of online retail’s most prominent executives. Shop.org is a division of the National Retail Federation, the world’s largest retail trade group.

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Once again, we were pleased to be a Silver Sponsor of the show and Producer of “Shop.org TV”, a series of interviews of industry experts at the show.  Special thanks to our wonderful interviewers, Bill Bass and Natalie Pietrzykowski.

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1. Interactive Merchandising - non-technical business managers need to be able to easily add, change, and remove merchandising features your website.
2. Advanced Shopping Tools - e.g. ‘pageless checkout’ tools

Rich Media / Video
Improving your shoppers’ ability to more fully visualize and understand products through rich media is another critical focus area in the coming months and years. As with traditional catalogs, online shopping suffers from a fundamental disadvantage compared to physical stores: Our shoppers cannot actually touch, wear or use merchandise before purchasing. However, unlike print catalogs, we can do so much more than provide simple pictures.

Video has proved to be particularly effective by demonstrating how others experience products, enabling shoppers to imagine themselves in similar situations. Williams-Sonoma.com uses videos of expert chefs to demonstrate how cooking tools can be used to make some mouthwatering dishes. MartinAndOsa.com cleverly uses very short video segments, lasting just a second or two, to give its shop-by-outfit experience pleasing and eye-catching motion that gives a surprisingly deeper and more interesting perspective on its clothing compared to static images. Competitively speaking, the sites that incorporate engaging rich media will have a natural advantage over text-and-image only sites, which will look increasingly outdated as time goes on.

3. Advanced Search and Guided Navigation - new ways to let consumers find what they’re looking for
4. Social Commerce - facilitate conversations and interactions between your shoppers

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In a new report called How Video Will Take Over the World, Forrester Research analyst James McQuivey encourages companies to embrace a world where video is everywhere.

[...]

In How Video Will Take Over the World, McQuivey lays out a vision for a world in which individuals will be able to watch video nearly everywhere on a variety of different devices, in which anyone will be able to produce video, in which remixes and mash-ups will be prevalent, and in which the video industry will become much larger and more influential than ever before. McQuivey calls this vision OmniVideo (OV).

[...]

According to the report, the technology needed to bring about the rise of OV—IP video delivery, mega storage, and cheap display screens—is already in existence, and core human needs will drive its implementation.

“I think a profound driver of everything we’re seeing is that video satisfies the brain in a way that other media just cannot,” McQuivey said. “And so, when you give people compelling video experiences and a relatively easy way to manage and control it, which the internet is, we see a huge response.”

McQuivey is particularly right to highlight the “core human needs” that drive video consumption.  Think about the news, for instance — most people get their news from TV rather than newspapers.  That’s not because TV offers better/richer/deeper information.  It’s because TV is more entertaining.

Similarly, while the text-based Internet is an amazing information resource, it’s also relatively less entertaining because it’s text-based.  That’s why many parts of the Internet are still mostly used by techie-oriented early adopters.  As video proliferates online, we’ll see increasing mass-consumer usage (and the presence of more mass-consumers will drive more energy into producing online video content).

There’s one more element of the “OmniVideo” vision to focus on — content creation.  That’s where SilverDock comes in.  We’re helping innovative companies like Amazon.com to create cost-effective and compelling video content.  We’re focused exclusively on making OmniVideo a profitable opportunity for eCommerce merchants, brands, and marketers.

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The problem is that YouTube’s DNA is that of a video sharing site, and Google’s DNA is in search.  Major acquisitions can be real trouble when a strategy shift is required and there’s no clear leadership to drive change.  Perhaps Tim Armstrong (a solid leader) can rally the troops around a new, advertising-centric model.  In that case, YouTube can take advantage of its pole position in this race.  Or, YouTube can continue to be Flickr for video (as Chad Hurley put it just two weeks ago)… while real innovators race past them to claim the lead in online video advertising.  Either way, the race is ON!

Excerpts from the WSJ article:

Wringing ad revenue from YouTube is proving to be a challenge for Google Inc.

Although users of the popular video-sharing site view clips more than one billion times on most days, the site hasn’t been as popular with big corporate advertisers. World-wide revenue from YouTube ads has fallen short of Google’s expectations this year, and is likely to total about $200 million for the full year, according to two people familiar with the matter.

YouTube is critical to Google’s campaign to extend its advertising reach far beyond text ads tied to Web searches, its revenue powerhouse. Google wants to sell more video ads and display ads on YouTube and elsewhere. It also wants to crack the television, radio and newspaper ad markets. Its target: the 90% of global ad dollars that don’t currently flow to the Internet.

[...]

Tim Armstrong, Google’s head of advertising and commerce in North America, is helping to lead the diversification push. When he dug into complaints from salespeople about Google’s system for selling YouTube ads, he uncovered another part of the problem: a sales system hamstrung by inefficiencies.

[...]

Twenty months after Google bought YouTube for more than $1.7 billion, Mr. Armstrong and his colleagues have begun to untangle the problems with its advertising operations — which generated 98% of Google’s revenue in the first quarter. The initiative is code-named “Project Spaghetti.”

The effort could affect how successful Google is at expanding beyond advertising tied to online searches. If Google is to maintain its torrid growth rate in the years ahead, it needs to tap other forms of ad revenue.

[...]

Google plans to begin accepting “preroll” and “postroll” ads, which will run before and after some YouTube video clips, according to one person familiar with the matter. The plan under consideration, this person says, would give companies that post video clips the option to sell such ads, and share the revenue with Google. YouTube has long forsworn such ads because consumers don’t like them. But advertisers consider them highly effective.

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. 1. Web video has become a key tool in e-commerce. About 59% of Internet users view at least one video per week and viewing by women is expected to grow by 55% in the next five years, says Geoff Smith, vice president of ShopNBC.com and Adam Lindquist, director of business development at 2nd Wind Exercise Equipment. When deciding to pursue video, retailers should weigh if the product’s price point offers a good return on investment, they say.

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Here’s one interesting opinion, from StreamingMedia.com’s Watchman column:

    The thing I most love that [ABC.com is] doing is their click-to-continue countdown clock. First off, the countdown starts as soon as the ad break does, not when the ad starts playing. Too many other sites tie the countdown to ad playback. The problem with this is what happens if the ad is slow to start? I, the user, then get penalized for your site not working. Whereas with the clock starting and counting down separate from the ad loading I never felt this sense of being penalized.

The real genius of this is the fact you have to click to continue after an ad. Because I’m in a lean-forward mindset I don’t mind having to click a button to continue, especially since in instances where the ad is slow loading it means I can click my way out of an ad before it finishes.

What’s really clever about it, though, is that it opens the opportunity for me to spend an open-ended amount of time with an ad. I have to admit, when I see one of those interactive in-stream ads I sometimes take the time to go through the whole thing, which often takes longer than the 30-second ad break. But I don’t mind as I’ve made the decision that I want to spend more time because I’m engaged with learning more about the ad.

Talk about a win, win, win! I win as the viewer, because I must be enjoying the ad if I’m watching it longer than need be, plus I feel like I’m in control and not being force fed. The advertiser wins because I’m spending more time engaged in the branded world of their ad, likely increasing the chances I’ll remember what the ad was about later on when making purchasing decisions. And in the end the content owner wins, as both the viewer and advertiser are happy with the experience they enabled.

So long story short, as the Watchman I’m all for in-stream ads. I’d much rather watch a few ads online than a ton of ads on TV, and ad countdowns are a very compelling way to hold my attention.

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Here is Kevin Nalts’ eight-step summary of how to do viral video (slightly condensed):

Step 1: Determine if your brand is right for online video.

Is your brand compelling and simple, or complex and direct-response oriented? If you’re a consumer-product goods (CPG), it’s a no-brainer.

Step 2: Keep it quiet!

The more senior management and attorneys you bring into a pilot, the more internal battling you’ll do before experimenting. Get some “air cover” from an executive sponsor, and avoid excessive internal scrutiny.

Step 3: Let go.

Your marketing message is critical to you, but if your content is driven by an advertising objective it’s at risk of being a flop. If you want to go viral, you’ve got to entertain first and promote subtly.

Step 4: Develop a creative brief.

Don’t make it too narrow, but give it some focus. If you ask people to make a funny video that includes your brand, you’ll get a lot of stuff that may or may not support your objective. But if you require creators to insert a series of “unique selling propositions” then you’ll end up with ads instead of entertaining videos.

Step 5: Engage creators. You have four options here.

• Option one, you can hire your agency to create video content. This gives you control, but most agencies (advertising, online, and public relations) lack experience in social media and online video in particular. I’ve found this to be extremely expensive, and often the agencies lack the expertise to make the videos “not suck” and get the videos widely viewed and “seeded” in the right places.
• Option two, you can hire individual amateurs. This gives you access to people that know the medium and have established audiences. This keeps things safer, but requires some oversight since you’ll need to interact individually with these companies or people.
• Option three, you can run a big, public contest. These are still quite common, but rather expensive. You’ll spend a lot on media to promote the contest (money I’d prefer to see brands use to promote the brand itself). You’ll also get a lot of lame content, but hopefully a few winners.
• Finally, you can contract with a third party that can represent a variety of proven creators. For example, a few large brands have contracted with Xlntads to help reach a collection of experienced amateur creators (note: I consult with Xlntads, and run its creative ad board).

Step 6: Get the videos seen.

If you want to buy media, you can run your videos as advertisements on a variety of sites. The second and third tier video sites are especially receptive to giving prominence to promotional content in fairly inexpensive media buys. If your content is good enough, you can hope it will travel “viral” style: people will share it with friends, post it on their blogs, feature it on their websites. There are three magic tricks that make this work:

• First, your content has to be good.

• Second, it really helps to leverage the distribution and audience of known creators. If an amateur has a popular blog or YouTube channel, this gives you a much better chance of wide distribution.

• Thirdly, you can “seed” it yourself or have the creators, third parties or agencies do it. This “seeding” involves reaching out to appropriate online properties, channels, discussions, forums and blogs. If it’s good content and you reach out to people politely your chances increase. I’ve seen bad videos that get lots of attention, and good videos that die. So this third step is non trivial and often overlooked.

Step 7: Evaluate.

Did the videos get lots of views and positive feedback? What did the comments say? Did people take a measurable action after watching the video? Keep your expectations in check: few marketing videos break into the millions of views, and very few of those viewers will take an immediate action (visiting your site, and making a purchase). These videos will, however, help your rankings via Google and other search engines. So maybe the next time a prospect is searching for your brand on Google, they’ll find your brand-friendly videos instead of a competitor’s content or disgruntled customer. This is a powerful and often overlooked outcome of a good video pilot.

Step 8: Scale as Appropriate.

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I found this article interesting because, about a year ago when it was written, Tedeschi noted that “Whether [video] will help build customer traffic and sales over the long term remains an open question.” Today, it’s clear that video CAN build traffic and increase sales. We’ve seen excellent results for clients ranging from Amazon.com to FrontlineShop to Kate Aspen (Brad Fallon’s testbed for StomperNet research in Internet marketing). The trick is that video is a LOT more complicated than AdWords search marketing! Results are harder to measure and all over the map. Today’s challenge is to optimize online video campaigns (whether video merchandising or video advertising) to maximize your traffic CTRs and conversion rates.

Highlights from Bob Tedeschi’s NYT article, “Online Sellers Discover the Power of Video Clips”:

Online retailers have begun capitalizing on the YouTube craze, offering a video platform for product demonstrations, rants and raves, sentimental messages and just plain bizarre behavior.

…

For at least one company, user-generated videos have led to a measurable boom in business. Blendtec, a manufacturer and seller of blenders based in Orem, Utah, started late last year posting videos of the company’s chief executive, Tom Dixon, blending random objects, including wood, marbles and Mr. Dixon’s iPod.

The company posted the videos on its own site, WillItBlend.com, as well as on YouTube, and promoted them on various message boards and blogs. The marble video, which can be seen at youtube.com/watch?v=3OmpnfL5PCw quickly rose to prominence on YouTube’s entertainment section, and since then, according to Blendtec’s marketing director, George Wright, the company’s 30 videos have been viewed more than 11 million times.

“We’ve seen wonderful improvements in sales,” Mr. Wright said. “Online, we’ve absolutely eclipsed our records, and it just continues to grow and grow.”

…

Mr. Corey said this year’s new golf clubs include even bigger drivers than before, some with square heads. “It’s going to take people some time to understand the features of these,” he said. “What better way to do that than with videos?”

Videos also help increase Internet traffic. The more Golfsmith offers videos and reviews of its products, Mr. Corey said, the better the chances Google and other search engines will point users to Golfsmith when they type a product name into a search box.

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 The problem is a tactic known as “piggybacking,” in which smaller advertisers use major players’ brand names, slogans or other trademarked words in the text of search ads to lure Web surfers to their own sites.

As a result, Google could face a backlash as it attempts to grab a bigger share of other advertising niches, including display advertising and video ads. Big advertisers say they may punish Google if they aren’t satisfied with the way the piggybacking dispute is dealt with. “This does play into our decision of overall spending — it has to,” says Michael Menis, vice president of global marketing services at InterContinental.

Adds John Gustafson, director of distribution and Internet strategy at Northwest Airlines: “If Google has an inability to help us resolve issues about abuses of our brand, that would impact our decision to participate in future forms of advertising.”

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