What Online Video Means to You Now

Business usage and consumer consumption of online video continues to explode. Earlier in 2011, Nielsen reported a 45% year-over-year increase in time spent viewing video content. Despite the remarkable growth, our analysis from 2010 remains true:

the rapid evolution of online video has been one of the most fascinating – and fastest-growing – competitive spaces on the Web. … That’s why so many content providers and media companies are moving aggressively to integrate digital channels into their content supply chains and build strong video advertising platforms and products.

Sometimes it seems like online video is a war of all against all. Consider the players involved in various forms of online video: Netflix, Overstock, Amazon, Wal-Mart, Google, Apple, the major cable providers, television networks and movie studios. Who isn’t in the online video business may be the simpler question to ask.

In some cases, these players are partnering; in other cases they are directly competing. Most everybody still falls into the “Content is King” camp. From a business perspective, the jury is sill out on the optimum models – paid subscriptions, ad-supported or freemium – to build a business on video content. Media and entertainment companies for instance are trying to figure when to make programming available online – that is, how long after it premiers on cable or “over the air.” The timing and mix of delivery methods is critical for them to most effectively monetize their content.

Businesses in other sectors – like consumer packaged goods or financial services firms – may be looking at videos to drive traffic to their Web sites or improve conversions. Increasingly, retail sites are featuring videos on their own sites or sites like YouTube and Facebook to expose their brands and products. As of Q4, 2010, almost three-quarters of U.S. retail sites featured included videos, according to this eMarketer report. Similarly, a recent Forrester report highlighted how some retailers are using video effectively.

At a high level, we see a “trifurcating market” when it comes to online video. Companies are using it in three primary ways:

• Promotional or product information to boost brand awareness, drive traffic to online properties and generate online sales
• Programming content – like DIY Videos, TV shows, Web-only programs or movie streaming (subscriptions or rental)
• General non-paid content – like customer support videos or CEO messaging.

From an analytics standpoint, companies with substantial online operations need to know how and why their customers and prospects are interacting with this critical category of content and how it is contributing to their business goals. What are the most compelling ways to use video in the sales cycle or for ecommerce purposes? Do customers who view a product video buy more? Are they less likely to contact customer support if they watch a demo? What are the key ingredients or elements that attract visitors and keep them most engaged? These are the types of questions effective analytics can answer.

The video tracking landscape is particularly complex. It is not uncommon for companies to leverage multiple video platforms and players, several video formats, or use various partners to distribute videos. Think about companies having a dedicated channel on YouTube or a video tab on their Facebook page. Each of these variables makes it harder for companies to collect and coordinate full and consistent data sets about their customers’ video consumption. This is where following a disciplined governance process and adhering to data management standards is especially important.

Most enterprise analytics platforms, like Adobe Omniture, IBM Coremetrics, and WebTrends can embed code into players to track video activity. In addition to standard traffic metrics, these packages can collect data to determine how much of a video is viewed, if it was auto-played or started by the user, shared with a friend, and attributed to downstream conversions. When it comes to understanding the competitive landscape, that data still often comes from third-party syndicated sources, like comScore or Nielsen. Pulling all this information together and integrating it to gain a clear and comprehensive picture of current usage and future opportunities remains the core analytics challenge around online video.

On the monetization front, many companies are still attempting to master the back-end. Technology requirements vary based on the business model. Many original content creators employ a premium service model where subscription, rental or purchase fees are charged for access to video. Others utilize a media model where videos are monetized through advertising. In both cases, there are information capture, validation and tracking requirements to manage.

Speaking of video ads, eMarketer predicts the domestic online video advertising market will reach almost $6B by 2014, up from $1.4B in 2010. Video ads typically take the form of in-stream ads (pre-roll, mid-roll, post-roll), banner ads packaged with the video, or branded promotional video content. Consistent with the display market, advertisers and publishers require detailed reporting of ad performance metrics to maximize yield and revenue. They must find the best ad-serving and traffic management toolsets and develop efficient sales processes. With comScore reporting that “Video ads accounted for 13.6 percent of all videos viewed and 1.3 percent of all minutes spent viewing video online” as of June 2011, these are increasingly important questions.

It’s fair to say that whatever type of business you’re trying to build online, video is likely to play an increasingly important role in it. So you must find the strategic linkage between your goals and video usage. Analytics and tracking, along with disciplined data strategy, can provide the necessary insights to manage and reinforce that linkage and – even more importantly – make sure you’re getting the most bang for your video buck.