Lights, cameras, action: The state of online video

Beyond giddy was the mood in Silicon Valley as Steve Chen, Chad Hurley, and others feted Google's $1.65 billion acquisition of their "brain child" YouTube. YouTube, a video sharing site and Web 2.0 phenomena, has well over 34 million unique visitors spending almost 30 minutes monthly on the site, viewing over 100 million videos and uploading over 65,000 new videos daily. Their number one video, the Evolution of Dance, has been viewed over 33 million times, according to The Wall Street Journal.

This highly visible acquisition - following earlier, quieter, and cheaper acquisitions of Grouper by Sony Pictures ($65 million) and iFilm and Atom Films by Viacom ($49 million and $200 million respectively) - has drawn attention and interest to the online video space by entrepreneurs, investors, and business people seeking to capitalize on consumer's insatiable interest in video.

Who are some of the video players?

With well over 200 online video hosting and sharing sites, consumers have choices of where to view, upload, share, compare, and comment on videos. Many of these providers have yet to fully monetize their current activities or to create differentiated business models to propel them to long-term success.

Among the players providing infrastructure support and video sharing are big-name successes like MySpace and Yahoo Video, but also relative unknowns like Addicting Clips, Blip.tv, Break.com, Brightcove, Clipshack, CrackMuffin, Current TV, Dailymotion, Dropshots, eVideoShare, GoTuit, Guba, Motionbox, Ourmedia, Panjea, Sharkle, Ultramercial, Veoh, Vimeo, vSocial, and Yikers. Given the social nature of the Internet, we've seen efforts to compare and contrast the video sharing sites on a number of criteria, such as ease of use, tagging options, social networking, editing capabilities, etc. Among the comparisons have been Digital Video Guru's "10 Services Compared," LightReading's "Top 10 Video Sharing Sites," and TechCrunch's "Comparing the Flickrs of Video."

Video viewership trends

A recent AP-AOL Video poll found that 54 percent of Internet users had downloaded or watched a video clip, although only 22 percent of video viewers have downloaded a full-length movie or television show. The top five preferences were:

• News - 72 percent.

• Short clips from movies or TV - 59 percent.

• Music videos - 48 percent.

• Sports clips - 44 percent.

• Amateur or home videos - 43 percent.

Video content creation

Online video content creation has been led by user-generated content or generated from commercial advertisements, television clips, pirated videos, or increasingly through licensing agreements with content developers. Given the more than eight million people that Telephia claims are using its cell phones to capture video, the amount of candid user-generated content will only increase.

The saturated market is creating barriers to success compounded by legal challenges based on copyright infringement. To address these market dynamics, companies are pursuing strategies that include (with examples in parentheses):

• Narrowcasting content to target a specific audience or topic (Election TV and The People Choose 2006, or specialty interest content aggregators like Pet Video).

• Differentiating through enhanced site technical features like video-editing capabilities (Eyespot, JumpCut, which is owned by Yahoo!, and VideoEgg).

• Generating new revenue and content through affiliate marketing arrangements (eeFoof, Lulu tv, Flixya, Metacafe, and Revver, with Revver showing the success of this model with the spectacular "The Diet Coke & Mentos Experiment" created by EepyBird and shown exclusively on Revver, generating well over $50,000 in shared advertising revenue).

• Serving as video-sharing engines to other industries or web sites (Reality Digital, and Vidiac).

• Creating the technology infrastructure for the high volume of video downloads (Limelight Networks and Akamai, hosting copies of videos around the world, and Cisco releasing new video software for business use).

• Launching and enhancing video search engine capabilities (specialty search engines like Dabble, PureVideo, SearchVideo, and SearchforVideo using tagged content and starting to incorporate voice recognition technologies).

How can your business use video?

There are various ways that your business can incorporate online videos into your customer engagement mix. Among these are creating promotional videos, re-purposing and re-distributing existing television ads or educational video, buying advertising pre-rolls (ads attached at the beginning of an uploaded video), launching user-generated video contests, adding video news reports and demos to your site, and/or initiating a video blog or blog to disseminate dynamic content online.

An example of a successful video campaign is Smirnoff Vodka's "Tea Partay," according to Fortune Magazine. The video has been viewed over 1.6 million times on YouTube alone - pretty effective viral marketing results given that the clip was uploaded by users rather than as part of a "paid" advertising insertion. In contrast, other ad campaigns like Specialized Bikes' "Gory ad" have seen modest viewership, according to Fortune.

The online video sharing sites have been hesitant to incorporate pre-rolls, although there have been companies like MTV, Yahoo!, AOL, and MSN that have been experimenting with incorporating these ads, according to a recent Wall Street Journal article.

User-generated ad campaigns, where consumers can create a video ad from components provided by vendors, have found mixed success, with some generating lots of buzz and controversy like Chevy Tahoe's Apprentice ad campaign earlier this year, and the more recent Butterfinger Follow the Finger campaign.

Companies like Buy.com have initiated video product reviews or demonstrations that help tell the story about the products they are selling or supporting. While this type of video use has grown, Brian Scoble at Scobleizer claims it hasn't gone far enough, as evidenced in his recent criticism of Google's lack of demo videos.

Other companies like Microsoft have launched video logs or vlogs to help engage customers with online video. Microsoft's Channel 9 is a good example of this technique. They've seen the future and it includes video.

Conclusion

Your business needs to become familiar with some of the trends in online video and begin to explore how these can be used to enhance your prospecting, customer engagement, and service.

Previous articles by Paul Gibler

• Paul Gibler: Joining the wiki wacki world

• Paul Gibler: Would you like your music (and data) mashed?

• Paul Gibler: Cutting through the blog fog

• Paul Gibler: No RSS feed? You're fired!

• Paul Gibler: Social computing in the Web 2.0 era