Just got back from an event hosted by TheFunded at Tesla Motors in Palo Alto.  The event is designed for entrepreneurs of startup companies, and I have to say the energy was pretty awesome - always inspirational to be around people that have big ideas working hard to make them realities.  It just made me want to blog, goshdarnit!

Frank Han - One Smart Dude.

While there, I met Frank Han, former EVP & GM at HSN.com, Founder of Glimpse.com, Co-Founder of eToys and SVP of Caesars Entertainment.  Frank is currently an Entrepreneur-in-Residence at Redpoint Ventures & Greylock Partners, busy thinking of The Next Big Thing.  Which brings me to Video Commerce.  Our conversation was wide-ranging, wandering from the promise of retail video distribution, to live video streaming online in a retail setting (pure-play and multi-channel) to new retail startups moving into video or planning to, and other new tech startups working on the problem of how to make video work in different ways for commerce applications. Finally, what really excited me was the general discussion of how video has the potential to transform the norm for shopping experiences online - meaning video has the potential to be much more than just another tool in the toolbox, but in fact, could represent an entirely different paradigm for the e-retail experience.  At the end of the conversation, I felt super pumped and inspired about the future of video.  There’s a lot of experimentation and innovation going on now in this space.  We’re all lucky to be involved in video commerce.  Together we are really inventing the future of video for e-commerce!

Justin: Hi I’m Justin Foster with the video commerce consortium and we’re very lucky to have with us here today at the streaming media west conference in beautiful sunny San Jose, CA, Ms. Alison Jeske from drugstore.com. Alison, if you would just take a moment and tell us who you are and what drugstore does?

Alison: I’d be happy to. I’m Alison Jeske. I’m the director of product management for drugstore.com and the family of our brands, which includes drugstore.com, beauty.com, and visiondirect.com. My team is responsible for site features and site enhancements and overall site experience on our family of site properties.

Justin: The reason we’re talking with Alison today is because drugstore.com is actually, really a pioneer with the use of online video and ecommerce. I would like to ask you, Alison, what was it that drove the decision to use video? How did that whole process work?

Alison: It really started with our total rebranding and redesigning of our media.com site which was last November–last September of 2007. We revamped the whole thing. One of the key components was introducing video. We had a lot of great videos produced by some of our key brands Frederick Frakay, Oscar Blandi, Jonathan Product. We had a lot of these great videos. We wanted to showcase those. Hopefully some of our objectives were to increase order value of course, always a key component for retail. But really driving customer engagement, and improving customer satisfaction.

Justin: What have you learned since you started using videos? Do you find it spurs engagement of videos? Is it driving sales on your site?

Alison: Well it’s still early to tell in terms of direct correlation. We’re definitely seeing a lot of positive customer feedback. We are definitely seeing longer session times. People are hanging around the site a lot longer, and engaging with those videos, and some of the newer videos that we launched rise up to the top very quickly in terms of views. And some of the older videos we have still hold the one and two position for the most views. And those are videos that have been on the site since last year.

Justin: That’s great. A lot of people that I talk with, I hear people–There’s kind of a buzz around online video. People are interested in using video. A lot of people just really aren’t sure exactly how to get started. What are some tips that you might give to another online retailer…who might be thinking there’s some potential with video, but they’re just not really sure if it’s going to work?

Alison: A couple things come to mind. One is: Talk to you manufacturers. Talk to your suppliers..find out who has videos. We found that so many of our manufacturers had videos for almost every product. But yet, they didn’t have a place to promote these. They kept them on their own branding sites. Just by asking questions, we found content was not going to be our problem .The next step was developing–finding a partner that was going to make it easy, we didn’t need IT help, we didn’t need to make this a massive project and develop a significant business case to try to pull these metrics together. Those are two really critical steps to ease ourselves into this.

Justin: It sounds like getting videos was a really important part of your video ecommerce strategy…you obviously don’t have to pay for the production of those assets. Now out of curiosity, you’re starting to do more self produced videos. What advice would you give on producing videos on your own? Is this something that should be a large initiative or expense or initiative?

Alison: It really doesn’t. We don’t really have budget specifically laid out, just for doing our own videos. It was something as simple as, I brought my camera in from home, we borrowed lights from the photo studio. We tried to script it out a little bit. We were going for something a little less scripted, a little more fun. Certainly bringing some whimsy with some of the products that we carry. Like gourmet girl cupcake maker. Some things, which are a littler funner type of products.

Justin: What is the future of video for drugstore and beauty.com?

Alison: It’s everywhere! It’s moving towards our product details pages. We want to take video not only in terms of a commerce component, but also, bring into educational content across various aspects of our site. We’re definitely seeing a future, and we’re definitely investing in this direction. It’s a very exciting time.

Justin: Good good. Well thank you very much for your time. We appreciate it here at videoretailer.org. And wish you a great rest of the show. And we’ll see you later!

PART 1: Video Commerce: Don’t Forget the Commerce Part!
Using online video to drive site conversion.

E-commerce video, when done correctly and approached strategically, can and does boost on-site product conversion rates. Leading online retailers like Circuit City, QVC, Ebags, ShopNBC, Tiger Direct, and HSN already know this. These retailers use video to educate the consumer and tip the mind of the buyer toward purchasing, while they also remain careful not to erode the number of coveted transactions through sloppy user experiences.

Videos on Product Pages:

In general, videos placed on product pages boost conversion rates more than videos placed elsewhere on your site. This makes logical sense, because the shopper is usually further along in the conversion funnel by the time he or she reaches the product page than when on the home page, search results page, brand pages, category pages, blog pages, etc. Well-done and well-placed videos on product pages boost conversion rates for a few reasons:

1. People are busy. Video draws the viewer in and makes it easier to consume product information.

2. Video can provide that “last bit” of persuasion to get someone to buy. The kind of powerful behavior change that we marketers love to incite in our shoppers simply isn’t attainable with standard product descriptions and imagery, or even zoom/rotate/3D views. Why? With video, a human voice reassures the shopper they are about to make the right decision. Detailed commentary and realistic views of the product in action help the shopper feel confident he or she is making “the smart choice.”

3. People understand video. I was speaking with a close colleague the other day about why RSS hasn’t taken off in the online marketing world as much as some thought it would have by now. His rationale: “It’s too hard to understand - it doesn’t pass the ‘Mom’ test.” Meaning - if your mom doesn’t know how to use it, then it’s not ready for prime-time. I don’t know about your mom, but my mom has no clue what RSS is. But, my mom does watch QVC - a LOT of it. Video passes the “mom” test. People are both used to video and are comfortable shopping through video. It’s no surprise that shop-from-home TV stations are among the most advanced practitioners of video commerce in the online retail world today.

Example 1:

Over 50% of the products on ShopNBC.com feature video. Videos are accessed via a simple tab above the product. The video tab is highlighted and draws the viewer’s eye, without distracting from the standard product photos or creating an unexpected shopping experience. There is limited conversion enhancing functionality within the player; for example, a “buy” option/link to shopping cart page is not supported within the player itself. The content is from ShopNBC’s live TV broadcasts. The content is produced professionally and is promotional in nature, with detailed product description in the commentary.

Conversion rate lesson 1: Let the shopper know video is available, but be careful about impacting the expected shopping experience. Video can be used to ‘tip’ the purchase, but may distract from the purchase if you don’t do your research.

Conversion rate lesson 2: Watch your conversion funnels.

Example 2:

Tiger Direct offers videos on product pages as well as on its own destination video site and through a YouTube channel. Videos are promotional in nature but highly educational, with a host explaining the nuances of each product for sale. The player here is more advanced than the one on ShopNBC, supporting sharing functionality, but buy functionality is not supported and placement of the video 1/3 down the page would likely only be viewed by someone seriously considering purchasing the item. Fortunately, many of the products sold by Tiger Direct carry with them a heavier purchase consideration: computers, electronics, etc. Again, we see video as the ‘tipping point’ for a purchase. After someone has seen the photos and read through a detailed product description, what else do they need? The answer: video. People want that extra bit of reassurance that only a moving image and detailed commentary can provide.

Conversion rate lesson 3: if you’re selling a complex product that requires a considered purchase decision, provide technical information in the video so that the prospective buyer feels a sense of comfort with the buying decision.

Example 3:

eBags has taken a unique approach to video commerce: creating “video product pages” on a destination video site. The videos in these pages are featured more prominently along with dynamic cross-sell based on the video and some interactive functions. In this example, eBags is leveraging professionally made promotional video from a supplier, Nike. The advantage of this type of video is low cost to produce (zero) and the ability to access professional quality content. The video player itself contains a “Buy” option as well as embedded links that direct the user to the product page.

Conversion rate lesson 4: Use interactive video elements such as links and player functionality to entice the “buy.”

And last but not least, I have to leave some stats!

Happy selling!

Video commerce is not a buzzword.  Video commerce is the act of selling online with video.  With an economy on the rocks and marketing budgets in many organizations taking a hit -it’s more important now than ever that each dollar of marketing spend be held accountable.  And while online video is relatively new to the online marketing party, it doesn’t deserve a free ride.

Hence, I’ve decided to blog a new 6-part series called: “Video Commerce: Don’t Forget the Commerce Part!”

This new blog series, beginning tomorrow, will take a critical look at online video as a persuasive sales medium for e-commerce.  It will help online marketers, merchandisers, and product managers understand video commerce applications in the context of overall site and marketing objectives:

PART 1.  Boost Conversion Rates.

PART 2.  Increase SEO.

PART 3.  Build Community and Loyalty.

PART 4.  Acquire New Customers.

PART 5.  Extend the Brand.

PART 6.  Raise Top Line Revenue.

The goal here is to help marketers reach their e-commerce goals using concrete tips & tricks, with actual video commerce examples.  We’ll share ideas and strategies with online marketers, product managers, and merchandisers who are interested in video commerce applications, but don’t know exactly where to get started.

I hope you enjoy the series.  And, as always, if you have knowledge to contribute or different experiences than the ones I’ve outlined, please comment on the blog, or, better yet, join the private members-only video commerce consortium where you can share your ideas and best practices with the most influential group of video commerce professionals around.  Also, if you have examples from your own company you’d like me to blog about, shoot me an email at justin [a t] video - commerce [d o t] org.  Video commerce is still relatively new, and while I’ve now spoken with scores of online retailers now about their experiences with video, by no stretch have I even scratched the surface of video commerce innovation.  Enjoy!

Today, eMarketer released some new online video consumption stats from Veoh Networks and ComScore:

Video Commerce Consortium video stats for online retail

I found the Veoh Networks stats interesting for a couple of reasons:

- Among active online video consumers, the audience skewed female (though only slightly). Conventional wisdom is that the biggest active consumers are 13 - 17 male and 18 - 24 male.

- Perhaps more interesting, the 35 - 54+ demo (M&F) constituted 30% of the active online video viewers. 30% may not sound like much, but what makes it really interesting is that this figure is for those 35+, meaning that the 25 - 34 demo is included in the first group (13 - 34). I need to dig up an earlier study from May/June 2008 that indicated the 25-34 demo is actually a significant demo for online video consumption. This stat seems to further dispel the notion that 13 - 17 and 18 -24 are the only demos worth caring about when it comes to online video.

This is BIG NEWS for video commerce. Why? Many of our e-commerce businesses don’t cater to the younger, male set. The fact that female viewers and 35+ viewers constitute a large portion of the audience for online video means that there is opportunity to reach a previously underserved demographic, and achieve a competitive advantage over other e-commerce retailers.

One thing I did want to mention about the Veoh Networks study. According to the study, most of the online video consumers have HHO’s (household incomes) under $75K. That stat must be skewed in a major way by the 13 - 17 and 18 - 24 demos, where one might expect lower reported incomes for those still living with their parents. In fact, overall consumption of online video tends to skew toward higher overall HHO’s, as one would expect since broadband has penetrated more deeply into households that can afford the luxury. Broadband, despite all the rhetoric and advertisement, still hasn’t reached utility status in the US (though it will reach 60%+ households in the US within the next 5 years - check out this Gartner study).

Justin

I thought we’d have the first non-housekeeping related post focus on some of the resources out there for video commerce.  Here’s a short list, please feel free to add others in the Comments section (if you have a blog you think would be valuable for our readers, or links to other articles or studies on video commerce).  Thanks guys!

What is Video Commerce?  Here’s the official definition, according to Wikipedia.

VideoRetailer.org - this is my personal favorite retail blog dedicated to using video in an online retail setting.  It is maintained by Xavier Casanova, Founder of Liveclicker.

Looking for some video commerce case studies?

Check out this video commerce presentation from the latest Streaming Media West conference.  Jon Nordmark, Founder of eBags and Alison Jeske, Director of Product Management at drugstore.com share a couple of case studies including some nice juicy stats on conversion rate increases when video is placed on product pages.  I moderated the panel.

Or read this article on how Wet Seal uses video to engage shoppers.

Looking for online video stats?  Here are some good ones:

“Spending by retailers on online video marketing will reach $338 million in 2008, up from $157MM in 2007″: http://www.internetretailer.com/dailyNews.asp?id=27991

“85 percent of US Mobile phone users already have a video capable phone”: http://www.mobilemarketer.com/cms/lib/1718.pdf (note: Thanks to Merwin Peters for posting this on the VCC forum!)

The following stats come from the Spring 2008 edition of Search Marketing Standard, print edition.  I can’t seem to find these stats online anywhere, so here’s a copy/paste from an earlier post I made on the VCC forum:

———————————-
Size of video audience (US):

~75% of Americans using the Internet watch video at least once a month
~10 billion video streams served in the US each month
comScore Video Metrix, Nov 30, 2007

> 56% increase in video viewers in 2007
Forecasted growth similar
Magid Media Futures, June 18, 2007

———————————-
So many people think that video is just for the 18 - 24 demo, kids,
tweens, and teens. NOT TRUE.

Size of US adult market steaming at least 1X/mo:

75% (18 – 24 demo)
61% (25 – 34 demo)
56% (35 – 54 demo)
Highest use in 35 – 44 demo (33%)
Next highest use in 25 – 34 demo (31%)
eMarketer/Ipsos Insight March 2007

———————————-
> 50% of video watchers say they engage in “some sort of response
activity” <– THIS IS AN AMAZING STAT.

Video tends to skew to higher incomes due to the need to have
broadband access.

As opposed to viewing video on TV, Internet viewers are more likely to
be engaged in a search activity (active consideration).

Kelsey Group, “Online Video: A New Local Advertising Paradigm,” May
24, 2007. Michael Boland, Sr. Research Analyst.

Happy Selling everyone!

All, welcome to the video commerce consortium blog.  I’m Justin Foster, founder of the VCC and let me first say how excited I am that we now have a group of e-commerce professionals, online marketers, and technologists that are coming together here to learn about and advance the use of video in e-commerce.

I’ve blogged before, but I wouldn’t call myself a hardcore blogger.  I’d really like this blog to be a valuable industry resource to complement the efforts of the video commerce consortium forum.  I’ll blog here, but we’ll also have guest bloggers from time to time.  And though I’ll try to blog regularly, no promises on posts being daily or even weekly.  When we have something cool in the world of online video to point out, we’ll post about it. 

Welcome all and I hope you can join the VCC - membership is FREE but currently limited to video commerce practitioners or would-be-practitioners only.