In the late 1990s, businesses were told they needed a website as part of their marketing strategy. Around 2008, they started hearing how important social media was to marketing.
Today, thanks to YouTube, the proliferation of mobile devices and ever-increasing bandwidth, online video has become the latest de rigueur marketing and advertising tool.
"You're seeing more and more – especially the larger advertisers – moving their advertising dollars from television and putting it into online," said Mike Tyler, CEO of War Room Inc., which specializes in producing web videos and target marketing. "That's because that's where people are consuming more content."
"The Internet is largely morphing from Web 2.0 to what I'd call the video Internet," said Jeh Daruvala, founder and CEO of Yactraq, which uses speech recognition tools to create metadata from video for optimization and monetization.
The growth of online video is staggering. YouTube gets four billion video views per day, and it is estimated that online video will make up 55% of all Internet traffic by 2016. It already accounts for 50% of all mobile traffic.
That growth has spawned several B.C. technology companies in the online video production and marketing space.
Vancouver's BroadbandTV was among the first companies that figured out how to monetize YouTube videos.
Other B.C. innovators include SoMedia Networks Inc. (TSX-V:VID) and Kelowna's HuStream.
SoMedia built a platform that uses a template approach for producing short videos for corporate profiles, testimonials and product information for as little as $700
HuStream's innovation is videos with clickable menus, much like the navigation buttons on a website. This allows viewers to skip to the parts of a video they want to watch.
HuStream works almost exclusively with companies that use video for marketing – Microsoft Corp. (Nasdaq:MSFT) and Intel Corp. (Nasdaq:INTC) among them.
One of the reasons video has become so important as a marketing tool is that search engines like Google (Nasdaq: GOOG) tend to rank pages with video content higher than those without it.
"The Google search algorithm likes video content," said SoMedia COO Ben Pickering.
"If you've got video on your website, it will boost the ranking within the search results page. And video is just a more engaging medium than text."
But considering that about half of all videos hosted on YouTube get fewer than 500 views, marketing executives may well balk at spending anywhere from $10,000 to $100,000 to produce a web video or video series.
According to Kantar Media, only 23% of national brands in the U.S. use online video for marketing.
"It's expensive, and people don't know the process and can't quite put their fingers on the ROI [return on investment] yet," said HuStream CEO Peter Matejcek.
Allowing viewers to click on menu buttons within a video, as they might do on a website, helps sustain engagement, Matejcek said.
"The average engagement time on a linear video is about 45 seconds," Matejcek said. "Very short, limited attention span, and that's the battle. When you have interactivity, you see increased engagement by five to 10 times."
But better engagement is only half the battle. The biggest challenge is getting viewers to a video in the first place in numbers that justify the expense of making it.
Tyler said too many companies jump on the video bandwagon without a distribution strategy. "They're just going ahead blindly producing these videos, not really knowing what they're doing, thinking it's going to work, and it won't.
"Before you even think about producing a video, I would find a digital strategist or somebody that understands that space for delivering video to your target demographic and come up with a really strong strategy. Otherwise it's a total waste of time. You need to make sure you have a business strategy that fits your business model."
Although War Room does full video production, its real forte is target marketing through video.
If you've ever gone to a website, clicked on a video and got an ad first – giving you the option to skip it or click and watch it – you've seen an example of what War Room does.
The company works with clients to first identify the company's demographic, then searches out and identifies sites with video that that demographic visits in high numbers.
It then works with those sites to embed the advertisements in the videos it makes for its clients in those videos. In other words, video within video.
A company that makes teacups, for example, will have a demographic: women aged 55 to 75. War Room uses analytics to find out which websites that demographic visits often – online women's magazines, for example – then works with those websites to embed ads in their video content.
"We optimize your video and then deliver it in front of content and then do the analytics," Tyler said.
Matching the content of a website with the content of a video requires some pretty advanced analytics.
Vancouver startup Yactraq uses speech recognition to mine heretofore untapped metadata locked in video in the form of audio. Yactraq translates every word in a video, turns it to text and then uses that to create metadata that allows video producers and distributors to better match their video with web pages that are relevant to the video's content.
"They're generating reams and reams of web page content, largely text-based, and these text-based articles are waiting for an appropriate video clip or two to be injected into them," Daruvala said.
- Shoppers using smartphones or tablets are three times more likely to view a product video than laptop or desktop users;
- 52% of consumers surveyed said watching product videos makes them more confident about online purchases; and
- 92% of mobile video viewers share videos with others – videos shared on Twitter on average result in six new YouTube browsing sessions.
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