The Changing Online Video Landscape

As online video matures, marketers will have to tweak their strategies to maximize the medium

There was a time when watching moving pictures required a television or a trip to the movie theatre. Even when the Internet went mainstream the opportunities to share videos was limited by bandwidth and the capabilities of individual computers.

Fast forward to 2009 and the landscape has changed dramatically. With the total value of pay and ad-supported online video expected to surpass $15 billion by 2012 (ABI Research, New York), the medium has become an important component for marketers looking to add new dimensions to their online strategies.

Backchannelmedia.com: March 17, 2009
Timothy R. Hawthorne

There was a time when watching moving pictures required a television or a trip to the movie theatre. Even when the Internet went mainstream the opportunities to share videos was limited by bandwidth and the capabilities of individual computers.

Fast forward to 2009 and the landscape has changed dramatically. With the total value of pay and ad-supported online video expected to surpass $15 billion by 2012 (ABI Research, New York), the medium has become an important component for marketers looking to add new dimensions to their online strategies.

As online video continues to mature, a few key trends have taken hold. Will Richmond, editor and publisher at Newton, Mass.-based VideoNuze says the first involves a "massive fragmentation" of audiences within more traditional advertising venues. "That fragmentation is making it hard for marketers to reach their intended audiences through traditional channels," he says, adding that the challenge is pushing more companies to use online video when targeting their messages.

Also making the online platform attractive for marketers is the fact that it allows them to engage and interact with target users and buyers via clickable ads, forms and other tools. Ad-supported video is also taking hold online, says Richmond, who sees the growing use of online video by consumers as a particularly compelling point for advertisers.

In fact, comScore's most recent statistics show that U.S. Internet users viewed a record 14.3 billion online videos during the month of December 2008, representing an increase of 13 percent over the previous month. YouTube led the growth charge, accounting for 49 percent of the incremental gain in videos viewed versus November. comScore also reports that 78.5 percent of the total U.S. Internet audience viewed online video; the average online video viewer watched 309 minutes of video per month; and 98.9 million viewers watched 5.9 billion videos on YouTube(or 59.2 videos per viewer).

"Those are some pretty significant increases," says Richmond.  Along the way, the audience itself has morphed to include people of all ages, and from many different walks of life. "There's a perception that video skews much younger, but the reality is that it pretty much covers the age spectrum," says Richmond. "With nearly 80 percent of the population watching some type of online video, there aren't many people out there who haven't tried it."

Rodger Roeser, president at Eisen Management Group, a Cleveland-based advertising and online strategy firm, says that while the user numbers are compelling, many marketers are still wary about adding online video to their marketing plans. "Some of them are afraid to try something new; they're afraid it will cost too much," says Roeser. "It doesn't help that there are charlatans out there telling people that they need to spend X amount of dollars to get results."

In reality, Roeser says a simple-yet-effective video embedded into a Web site can cost as little as $200 to produce and publish. For that fee, he says marketers can use a video camera to create a product overview, company introduction or demonstration. "The key is to keep it short and uncomplicated," says Roeser. "If you're looking for a Gone With the Wind production, then call a marketing expert."

As more marketers become comfortable with online video, and as companies continue to benefit from the interactivity that it provides, expect to see the medium make the jump from the computer to the television screen, predicts Richmond. "So far, we've seen a high percentage of online video consumed on computers," he says. "Now, we're seeing a movement to consume broadband via TV."

Richmond points to free video site Hulu.com's recent decision to cut off access to its open source media player as proof of the movement of online video to TV. The free video site pulled all of its content from CBS's revamped video site TV.com on February 17. Days later, it removed programming from Boxee, an open source social media player that lets users watch Internet video on their television sets.

"Boxee is a leading-edge service for getting video onto TV, and Hulu cut that right off," explains Richmond. "Basically, this shows that the companies delivering content online realize that the ability to bring the video over to TV is upon us, and now they have rethink their models to make them successful in this environment."

Television manufacturers like Sanyo, VIZIO and Sony - each of which has announced its plans to enable broadband access via TV by the end of 2009 - seem to have found an early edge in that race. "Right now there are various initiatives underway to try to bridge these two worlds that are clashing with each other," says Richmond. "Just like you wouldn't buy a TV today that doesn't have HD, four years from now you won't even consider buying a TV that's not broadband-enabled."