Feature Story

Online Video's Business Proposition

by David Rogers


YouTube's search engine has surpassed Yahoo and Bing as the second most popular form of search on the Web. And Netflix's popular streaming video service now consumes over 20% of all U.S. Internet bandwidth during the primetime viewing hours of 8:00 to 10:00 p.m.

It's no surprise, then, that businesses of all kinds and sizes have started to recognize that online video can be a powerful tool. But what forms of communication is video best suited to? Certainly, entertainment (like Netflix's fare) is a natural fit for video. But a fixation among many advertising firms on creating "viral videos"—funny, entertaining ads that viewers will share and spread among friends—has at times overshadowed the range of other business uses for video.

Five communication goals that online video is particularly well-suited for are:

1. Communicating process

Text may be an excellent medium for analysis, but video has a distinct advantage when attempting to describe processes, because it combines the visual with the sequential. This is why "how to" videos have seen enormous recent growth on platforms like Howcast and eHow.com. Home Depot has built a YouTube channel of how-to videos that offers step-by-step instructions on home projects that send customers to its stores; Home Depot has attracted over 7 million views to its library of 191 videos. DirectFix.com, which sells electronic parts to customers to repair their own gadgets, has saved 40% on its customer service budget by developing web videos that demonstrate product repairs in step-by-step detail. See video: http://www.youtube.com/watch?v=MRGKDAAR_tM

2. Demonstrating context and relationships

Another highly effective use of video is for product demonstrations.  This is because the medium is well suited to showing product features not just as an abstract list of bullet points, but in the context of customer usage, and in relationship to each other. In fact any truly innovative product, which requires more explanation than a category description (e.g. "digital toothbrush") and two bullet points ("cleans faster", "plays MP3s"), is better served by a video product demo than by text. It's no surprise that introductory videos have become so commonplace on website homepages.

3. Conveying personality

Politicians of every stripe—from Hillary Clinton to Newt Gingrich—nowadays launch their campaigns with a video. The reason is clear. A successful political campaign requires that the candidate connect with voters personally, not just on the issues. Video is an extremely effective tool for conveying personality. (Probably more so than conveying policy: the most watched YouTube video of Barack Obama's candidacy was a clip that showed him dancing as he came onstage for Ellen Degeneres's talk show.) FedEx has used this power of video to tell the personal stories of its employees in its online "I Am FedEx" campaign.

4. Bringing intimacy to interactions

Our one-to-one communications are increasingly shifting to asynchronous media like email, social networks and SMS. By contrast, actual phone calls are becoming less common (for some of us, even surprising). So when we do opt to have a simultaneous communication, our expectations for intimacy are higher. Hence, the increasing interest in video calling, which provides that greater intimacy. For instance, customers went crazy for last summer's Old Spice Guy "response videos" – when the brand's TV character started responding in video format to questions posed to him around the world on Facebook and Twitter. See video: http://www.youtube.com/watch?v=_-fLV28SkZ8

5. Inspiring participation

Lastly, online video can be very effective when businesses are seeking to inspire participation by their network of customers. In a few short years, video has shifted from a professional's medium, to one where nearly everyone feels comfortable contributing. This can be seen in the incredible rate of growth of YouTube: 35 hours of new video are uploaded each minute. Ford Motors successfully created buzz among "Gen Y" drivers before the U.S. launch of its Ford Fiesta, in part by inspiring a team of 100 test drivers to make and share their own videos about the car. GoPro, which manufactures wearable digital cameras designed for sports enthusiasts, has grown its business 300% a year by soliciting videos from its own customers that show how they are using the product. See video: http://www.youtube.com/watch?v=MQA15Yhymog

Certainly, online video is well known for its entertainment value. But as businesses develop communication and content strategies to engage audiences inside and outside their organizations, they should remember this: online video is good for much more than just laughs. It's a powerful and effective communications tool for any organization.

David Rogers teaches digital marketing and strategy at Columbia Business School.

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