March 06, 2019
Is Video Commerce A Game Changer?
by: Jaffer Ali
(Originally Published: April 7, 2012)
If you are marketing online and not yet using video in some manner on your website, you may want to pay particular attention to this article. Video enabled sites may be a minority right now, but that will soon change.
Presently over 70% of online retailers use some form of video. Online researcher eMarketer released a study stating that sites using video had a 9% increase in time spent on site versus those not using video. As time spent on site increases, conversion rates also increase. Our own A/B testing using video demonstrations of four different products at PulseTV.com resulted in an average increase in conversion rate of 29.8% with video versus no video.
According to Jupiter Research, nearly 40% of videos viewed resulted from search. Video search is here to stay and having video on your site is one more way to generate traffic. And when it comes to traffic, search traffic may not be scalable, but it is free and anytime you can grab some free media, do it. Wow, if nothing else, we exhibit a firm grasp of the obvious.
Before we get too far down the rabbit hole, let's define "video commerce". Video commerce is using any video to aid in the transactional process online. Video can be used to drive traffic and video can be used to help close the sale. Many reading this are TV direct response marketers who probably think they know everything they need to know about producing and using video leading to transactions.
But it would be wrong to think you can transfer short form commercials or long form infomercials online and be successful. Been there...done that. In 21st century millennial lingo- epic fail! Let's take a survey of different ways video is used online to drive online sales.
Short Form On Your Website
Taking 2:00 or :60 spots and slapping them on your website (minus the end slate of course) is better than nothing, but not much better. Why? Online is a different medium from television. It is more intimate. Traditional DR spots yell or bark at you from afar. The computer screen is usually less than three feet away from the audience and this barking is a real turn off in the intimate setting of a person sitting at home or work with a lap top.
Using Short Form as Pre-roll
Here, you take your short form commercial and place it before content clips in the hope someone clicks to your website to order. Even without the end slate, you are looking at around :48 commercial and this is entirely too long for online video. Pre-roll length is presently beating a path from :05 to:15. Abandon rates exceed 40% for :30 spots and increase precipitously the longer the commercial. Click thru rates are now less than .5% and decreasing annually. Cutting your commercial to shorter lengths will lower abandons, but click thru rates decline even further. The numbers simply do not work for websites or DR marketers. Rates on YouTube for RON range from $10/M to $13/M and online ad networks range for remnant from $10/M to $15/M. Let's take a look at the economics:
1,000,000 Views at $10/M = $10,000 buy
Abandon rate for a :60 spot (:48 minus end slate) =50%
Total Video views to end: 500,000
Click thru rate at .5% = 2500 visitors = $4 per visitor
Conversion rate at 2% = 50 orders = $200 CPO (Cost Per Order)
These are actually generous assumptions. Abandon rates may reach 70% and pre-roll is charged on the commercial loading, not actually being viewed.
The main advantage of using pre-roll is that you can get wide distribution. The negative is that you have about as much chance of making this work as having a snowball fight in hell.
Using Long Form Infomercials
As much as producers and marketers love their own creative work, it is important to understand the difference in online viewing habits versus television, at least for now. Online viewing is more of a "snacking mentality". Video snacking is a term for watching one to five minute video clips rather than the full meal or program. YouTube is the video snack capital of the world. Over 10 billion video snacks are served weekly now, most of them less than 4 minutes.
It is difficult getting audiences to sit still online to view content for 28:30 let alone sitting to view a half an hour advertisement. Forget about the false notion of build it and they will come. This sort of thinking was great for the Internet circa 1999, but those reading this should be folks who want to make money. It is enormously difficult to scale views of long form infomercials.
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These are short vignettes that have a feel like HSN or QVC. Zappos and our own e-commerce site at PulseTV.com use this style. The danger though is time creep. You want to keep these video demos under 2:00 if at all possible. LocalDealFinder.com has a trick to keep people watching; they use sexy models. We use real people from customer service department and our product managers go on camera for a "folksy" style.
Video Content as Bait
The line between entertainment and selling has been pioneered by Time-Life with their great infomercials selling classic rock music collections. Also noteworthy pioneer has been Guthy-Renker selling vintage classic television programs like the old Dean Martin Roasts.
The idea behind these was to blur the line between entertainment and solicitation. Well, online this is also being tested. Actually branders are ahead of DR folks in this category with "branded entertainment" productions. The idea is to embed the brand messaging inside the videos, using entertainment as bait.
Our e-commerce company PulseTV has used licensed video to attract clicks/visitors and entice them to purchase. We have done this with Elvis video clips being streamed on a landing page selling high performance branded Elvis Ear Buds. We generated a lot of traffic, but sales were miserable.
But we were successful with Amos n' Andy video clips selling the old Amos n' Andy video collection. We sold about 10,000 units in 10 months before it ran its course. Not a home run but a modest success. The advantage of using video content as bait is you can generate a lot of traffic, but the intention of that traffic is to watch video snacks and not purchase. A definite negative.
What About Distribution?
OK, once you cross the Rubicon and decide to utilize existing video assets or even better, create new ones for the online experience, how are you going to get your videos seen? Obviously creating landing pages on your site where traffic that comes to you will see your videos is primary. This helps conversion rates, but hardly is scalable. So how can you generate more views?
First thing is forget about thinking that your videos will go viral. You have a better chance of winning the lottery. Distribution is actually the most difficult part of a video strategy. You can upload the videos on YouTube of course, and you should. YouTube generates over 60 billion video views per month and over 48 hours of new content is uploaded every minute.
While uploading is free on YouTube, you get exactly what you pay for here. You will be lucky to get 1000 views per video per month and worse, the click to order feature seems like it was designed by the same powers that designed a camel. This is not a serious DR distribution strategy...at least not yet.
Working out PI deals (CPA for those online folks who never heard of PI) is great in theory, but publisher websites are not eager to jump on this bandwagon because online audiences often view videos of products and then "shop" for it cheaper somewhere else. And they usually find your product discounted online for 25%-35% off from what you are trying to sell it on television.
Nobody has cracked the video distribution code for video ads at a cost efficient mode that scales. And what I mean by scale is having your videos seen by millions of people. Utilizing video is a game changer when it comes to conversions, but we need the best and brightest minds working on distribution. This is ultimately where the pot of gold lies and separating the hype from reality is essential. Otherwise, you will only be digging for fool's gold.
Original Article: Is Video Commerce A Game Changer?