FULL VIDEO TRANSCRIPT:

Justin Foster: Welcome everybody, thank you for joining us at Video Commerce “The Quiet Revolution in Online Video”.  I see a couple of familiar faces out here in the audience, thanks for making some time for us here.  We’ve really got an all star panel so I am going to try and keep my remarks as brief as I can.

My name is Justin Foster I am the founder of a group called the Video Commerce Consortium,   It is a group of about 500 online retailers, eCommerce people, online advertisers who are dedicated to advancing the use of Video eCommerce.

We’ve really got an all star panel, here, we’ve got HSN, we’ve got Hot Topic, we’ve got PFI Western and we’ve got Zappos, and each one of these panelists has prepared a brief presentation for us.  It is going to give us an idea of what some of the Webs leading retailers are doing with video today.

So a couple of just notes I wanted to make about Online Video in our retail environment that are high level. So last year Forrester Research ran a study across the top 50 retail sites and 18% of the top eCommerce sites were using Online Video.

This year the same study they just released just a couple of weeks ago, 68% of online retailers are now using video on their sites, the top 50 retailers.

So the use of online video in retail is really exploding right now, and as more and more retailers are using video, we also see that the retailers that are using video are dramatically increasing their investment in video.

But there is still really a lot of confusion around, what does video actually mean in the context of eCommerce.  For example: Are retailers moving more toward using video as a direct shopping tool (inaudible) QVC or HSN?

Is video primarily a branding tool?

Is video an entertainment medium?

Where is that ultimately going to end up?  And I think each of our panelists is going to share with us a little bit of a different perspective, and hopefully, at the end is what we will have is a greater understanding for “Where Video in eCommerce” is actually heading.

So with that I am going to go ahead and turn it over to our first panelist here, Jason from PFI Western. Let’s give Jason a hand.

Jason Arend: Thank you Justin.  As Justin said my name is Jason Arend.  I am the Director of eCommerce Online Marketing and Creative Services for all PFI Companies and the Production Director of the Television Show “Shopping Western Style.”

PFI actually started in 1975, as Preferred Farmers Incorporated, which was a dusty little cattle feed and farm supply store in the Midwest, and we long ago, stopped selling cattle feed.  We have several successful companies now.  Ranging from equestrian stores to private label wine companies and we are now one of the largest single store Western Retailers in the world… as… and certainly the most innovative.

PFI Western Store, which is what I am going to be focusing on today, consists of a single 50,000 square foot retail space, with over 20,000 boots on hand, and our online business PFI Western.com…is you’re computer going to sleep?

Justin Foster: Yeah.

Jason Arend: About a year and a half ago we were looking at creative ways to stay aggressive with our marketing efforts and reaching customers in what we knew was going to be a tough economic period.

And so we decided to purchase airtime on a niche network…I’m sorry, a niche market television network called RETV.  They are a satellite and cable network that reaches about 40 million households and has programming directly related to the Agricultural and Equestrian lifestyles, very much our core customer for PFI Western Store.

So what we did is we created a, sort of, Western Home Shopping show….keep that going for you….features the latest in Cowboy Boots, Saddles, and Western Fashion.  So it’s extremely important that we keep the show as down-

So we shoot everything in house, unscripted, using representatives from our Manufacturers and In-Store Product Experts as talents.

Often the designers themselves will come on and talk about the product and how it directly relates to the lifestyle of our customers.

We are using the show primarily as a Direct Sales Tool, but we also use it for educational purposes and merchandising.  This has worked really well for us so far and we are going to continue with this format.

But we are producing other types of Web Only Content, such as, product “How to’s”, “Product Care Guides” and “Fit Guides” and so on.

By building really close partnerships with our Manufacturers, we have been able to cover almost all costs using Co-op Dollars and Advertising Dollars, and we’re close-knit with them to make Shopping Western Style an important part of their product launches and promotional schedules.

So we’re really the first to be able to showcase any products related to the Western Industry, which really is helping us, with branding us as the authority on this Lifestyle.

Once I had the production workflow pretty much running efficiently, I knew it was crucial to take this content and get it online.

So you don’t really have to have a lot of resources or money to start putting Product Videos online.  At this point we had the content, but, absolutely no budget whatsoever, to carry out our Online Marketing Strategy.

And there are about three months on top of our normal workload.  Myself and, my Programmer, Mike Beats were able to develop a massive branded Video Commerce site that has all of our Product Videos from the actual Television Show itself and all the full episodes.

Obviously, I am not even close to being a Cowboy, but, one of the things I’ve learned as I’ve tried to get a grip on this industry, is that, the good majority of our customers are several years behind on most technologies and, actually,

37% of our demographic is 50 plus.

So they come from a rural environment, they’re still very nervous about purchasing and divulging personal information online, and using the same product experts that we have in our store, has allowed us to put a personal face on our Website, where, no of this really matters as much anymore.

It’s all starting to change, we can build trust with them, like I said before; we can have a personal face for it, so it’s really working out well for us.

We now actually have over 55 full (inaudible) sections, 26 minute episodes of our Television Show.  About 500 pieces of unique video content, currently, online.

And on average we are seeing a 50% increase in conversion rates on the products that have videos with them and a 27% reduction in Returns.  This has really blown us away.  We’re also seeing increases in Average Order Value.  Increase in Return Visits and longer average time on sites with nearly a quarter of our daily visitors viewing Onsite Videos.

Again, completely changing the way we think about Online Merchandising and Customer Engagement. And as Justin said before, we’re really using a strategy of “Video Everywhere” with our Branded Video Commerce Website.

From the Video Branded Commerce Website to Landing Pages, to Product Pages, syndication to all the Video Share-In Sites, Social Networks, we’re using it in the majority of our Email Campaigns’ as well, and seeing a two to three times click through on the emails that have videos. As well as RSS Feeds and; Syndication to the iTunes Store, which has, worked out well for us.

Since the very beginning of the show we’ve been syndicating all of our content to, about, the top Online Video Sharing Communities, and this has been the absolute least effective in driving traffic that we’ve seen.

People are not looking for our type of content directly on YouTube, but it does help with Brand Visibility and SEO.  We’ve got the costs down to pretty much nothing, where the workflow is automated so… that’s about the only benefit we’re getting from it.

The SEO Benefits are absolutely the most attractive part of using Online Product Videos.  Not only are we starting to see substantial increases in our Organic Rankings, we’re actually dominating the Video Search Results, where nine out of the ten of the top results in Google in the Video Results, are ours, most for any of our Targeted Keywords.

And often, in being in Yahoo, we’re seeing over 90% of the Videos on the first page are ours for Targeted Keywords.  So, that is by far the best that we’ve… are the top benefits to using Product Videos Online.

One downside to using Video Content that was originally targeted to a Television Audience is that it doesn’t quite follow Best Practices for Online Product Videos.  So what we’re doing next is creating a bunch of 30-60 seconds short Product Demonstrations…the computer’s gone to sleep on me again…and we’ll be rolling those out over the next few months.  They’re actually, really, really similar to what Zappos is working on currently.  With a lot more emphasis on Lifestyle, and initial tests we’ve done, have worked quite well.

While we’re extremely happy with the current state of our Video Strategy, there are a lot of new areas that I am exploring.  From Infrequent Video MMS Messages to our Text Message Subscribers, iPhone and Mobile Applications, Interactive In-Store Videos and all encompassing Video Shopping experiences through Touch and Able Devices.

Using existing Multi-Touch Technology such as iPhone, the Palm free or this long rule board Apple Tablet, are going to allow us to build a completely new experience.  Where we can really streamline the navigation in UI from what we are seeing on Websites currently, and provide a much more enjoyable experience through these touch enabled devices.

I put together, here, a quick demonstration of what…kind of where I see things going Online. Let’s say you’re watching Curb Your Enthusiasm online, and you want to know what this shiny computer is that Jerry Seinfeld has in front of him.

You can simply click on the video here and it will instantly bring up more information on that product.  It will show you images, other media that you want.  You can quickly look at other products that are I that are within that show.  You can even click on the Desk or the Jacket.  You know at any point you can click on something within the video.

So this is one of the technologies that we’re working on currently as we’re moving forward with things.  And, not only is this going to be good in an eCommerce environment, but it is going to provide additional revenue streams for entertainment companies.  Your Hulu or NTV, you can Tag the products within your Video and create additional revenue streams there.

So video is very much the future of eCommerce.  More and more eCommerce Retailers are getting on it and, as I said before, our main goal was to increase branded wear and reach new customers, and just after a few years we are now shipping to over 40 countries, and this is now our strongest year ever.  So we are just getting started.  Thank you.

Justin Foster: Great.  Thanks Jason

<Applause>

Now we will go ahead and we will have Mike Sullivan from Hot Topic (inaudible)

Mike Sullivan: Hi everybody, so Hot Topic, you’re probably familiar with us from your Mall experience and we’re probably the place where you don’t want your kids to shop, or at least it used to be that way 10 years ago.  We’re much more main stream now.  But we’re actually one company with three very unique concepts.

So there is Hot Topic the Retail Store, focusing on Music and Pop Culture related merchandise.  Tord <sounds like> is a retailer of…a fashion retailer, targeted at plus size women, and ShockHound is kind of our baby.  It is kind of a one stop shop where everything music.  MP3’S, Vinyl, Band, Merchband T’s.  And a big part of what we do is Editorial.

Here are some Vinyl stats.  We’ve been operating for about, a little more than a year.  We have 800 plus videos, across all three brands.  We put about 50 videos a month, 25 original productions and that doesn’t include product page videos.  That’s…I count for that separately.

70% of our time is focused on ShockHound because of the editorial nature of the site, and, then 15 for Tord and 15 for Hot Topic, but that varies seasonally.

We have 3 full time video staff and we’re very busy, because there is a lot to do, and we distribute via YouTube and 3rd Party Video Sites and with an internally developed player as well for ShockHound.

So, let’s break it down by concept.  You know one of the goals for Hot Topic is to really connect fans to the things that they love.  We do this through the merchandise that we sell, through the collectibles, through the apparel et cetera.

But another thing we do is sponsor events at our stores across the country in Tours.  So we have Musicians and Artists come out and do signings and perform.  We do Cast Member Tours; we just wrapped up a 15 stop, Nationwide Tour of the Twilight New Moon cast.  So that was very successful.

We…we for the Video our purpose there is to document that and to…to kind of share the love and to…to share the excitement for people that weren’t there, and that’s kind of a great thing for the fans.

We also are an apparel retailer so we always want to show our latest fashion trends.  So we do kind of a behind the scenes photo shoots.

We also do “How To” videos with out Cosmetics and some oddball stuff every once in a while.  And we have Product Page Videos; we’re going to get more into that in 2010.  Here’s a quick sample of some of the Hot Topic content.

<Sample video played to audience>

Those guys will teach you how to do the Jerk Dance if you’re interested, head on over to YouTube.

OK.  Tord is our second concept.  Tord is a fashion first, that’s the focus.  Although a customer might be Plus Size, you know we don’t sell your mother’s clothing, it is very fashion focused.

That being said, our customer is so well…so we create fashion, obviously a trend…trend look videos that kind of thing.

We have our customers who are unique, they’ll sometimes…our girls have confidence issues or body image issues.  We like to create inspirational pieces, talking to celebrities or models who have succeeded and that are comfortable with themselves and that are confident and hopefully that confidence, kind of…you know…imparts a little bit of…of confidence gets imparted in our customer as well.

And Product Page Videos, we’ve just recently got into this.  We ran tests for Halloween and the Halloween Collection just blew out, so that’s a very good sign.  And…we like to think that video had something to do with that.

Our goal was to create a Frictionless Shopping Tool.  It is not as informational based as maybe some of the others up here.  But the video in itself really is a lot of information about clothing itself, especially.  How it fits, which is very important to our customer.  How the material flows, you know…how the light reflects off of it.

I was expecting maybe 30% to 50% of people on those Product Pages to click on a video.  It turned out to be 110%.  We are getting 1.1 views per unique visitor to those pages. So pardon me, our mock up here.

<Sample Video played to audience>

This is our Product Page here, we have the iMag when you roll over, and we have a Play Button which says “Watch Video”.  Basically you activate that right in the same spot as the Product Image; the model walks out…kind of a runway style video.  Real short, real brief, but it’s a 360 degree view, and then you’re out and then you’re back to the photo.

So a lot of information is just in that little clip and I think everybody is pretty excited about the…the engagement level is very high.

So real quick, I know we’re running really tight here.  So ShockHound three or four original videos per week, the focus for all our content there is music discovery.  Very entertainment focused.  We do interviews and live sessions.

We have a music review show once a week “I’ll Talk” on Tuesday.  A cooking show called “Stella Can’t Cook” which is another way to get Artists in environments to get to know them a little better, for their fans.

Music Videos and label providing contents such as UPK’s and whatnot.  One of the cool advantages with working with the labels is that they’re on our side when we’re creating a piece of content about one of their Artists, they’ll go ahead and push the Social Media on it.  They’ll put it in My Space, they’ll Tweet about it.  So that’s a great way to drive traffic.

One of the challenges is that its opportunity based production.  If we have an important Artist that is available at…you know…tomorrow for an hour, we’re going to drop everything and go and get that because we’re not going to be able to grab that interview at a later point.  So that makes a juggle in our schedule very challenging. I’m way ahead of time.

Justin Foster: Yes you’re doing good.

Mike Sullivan: OK.  Here’s a brief sample.

<Sample video played to audience>

Mike Sullivan: OK.  So…future vision…Product Page Videos will play a very prominent role across those… across our sites.  Video content will be repurposed and we’re going to enhance the in store Experience with video, which is going to be pretty cool.  And we are going continue and grow our relationships our entertainment partners.

And one thing that I wanted to add was that, you know, a lot of work we’re going to talk about is RLI Conversion Rates, that kind of thing.  But, you know, every company has a heart and soul and we kind of like to wear ours on the sleeve.

So, you know, a lot of what we do is more about branding and association and if we can…for that Harry Potter fan, if we can associate HotTopic with Harry Potter, for a future purchase that’s very valuable long term… So thank you.

Justin Foster: Thanks Mike.

<Applause>

All right…now we will have Jerry Johnson from HSN.

Gerry Johnson: Thanks, I’m so glad that’s over…

First, I guess let me apologize for my voice, so if you can’t hear me in the back, just, raise your hand and I will speak a little bit louder.

So…I’m sure everyone over here has heard of HSN.  Anyone not heard of HSN?

I work in the Advance Services Group and the Advance Services Group is a group that we created about four years ago and, interestingly enough, one of the key tenants of the group was really to, kind of, understand where this TV watching experience was going to go over the next few years.

As being part of, kind of, the original .com launch team, it’s also interesting to see how things have evolved over the Internet over the last 10 years.

If you remember back in the early days there were all these attempts to, kind of, take the Web and put that on TV, with Web TV and so on.  And today you see a lot of TV content and TV experiences actually being delivered onto the Web itself.

So really quick, I won’t go too much into this, HSN has been around for over 30 years.  We were the first to actually launch TV Retailing in the United States, and we have an experience on TV nationwide in over 90 million homes with our linear channel.

We’re Online with our HSN.com property and catalogues with our (inaudible) brands, and brick and mortar stores with our Outlet Stores.  We are a 24/7 broadcast channel.  The only day that we don’t broadcast live is Christmas Day.  So we actually do broadcast, but it is not a live program.

HSN.com launched, like I said, in 1999 and has steadily grown over the years.  Today it ranks in one of the Top Ten Traffic at eCommerce Sites, and continues to contribute to a large percentage of our sales for the overall business.

The Advance Services Group, like I said, has been formed about four years and…really one of the key things was, you know, people have always watched TV a certain way for many, many years.  You know…appointment viewing, you know…you either had to rush home from work or, kind of, get in front of a TV to watch the 6 o’clock show or the 8 o’clock show.  It was more of an appointment viewing type of experience.

And, you know with the advent of TVO and PVR’s and DVR’s and YouTube it’s become more of an On Demand type viewing.  It’s pretty much, you know, you miss the show live, you can catch it wherever, you know, in many, may places.

So, we’ve been experimenting with a lot of things.  Not only have we launched our Interactive TV Experience, but we have also launched Traditional VOD’s so you can catch in markets where it is available to you.  You can catch HSN on Cable VOD and we also have a true 24/7 Live Streaming Experience.

Our…a little bit more detail as far as Video.  So Video’s in our DNA, right.  We started doing Video on TV many, many years ago.  And the focus has always been our customer.  It’s a key thing no matter what you’re doing.

It is “always focus on what the customer wants”, is it “appropriate for the customer” and “does it make sense for the customer?”  So with that being said, since all of our, or a large percentage of Video that we capture and repurpose is off the Linear Channel.  Most of it is… I’ll give you two words, “Merchandising” and “Selling”.

We do have a small percentage of video that is, kind of, supported by Promo’s and Bro’s.  But for the most part it’s all about our product and merchandising.

We support a whole gambit of video formats and actually platforms.  Everything from H264, Mpeg2, Cable VOD for the Cable Platform, Windows Media, VC1 and some other, Narrowband Formats. Bit Rates…everything from 100 kilobytes to 2.8 Megs.

An interesting thing about that is, probably about five years ago, we used to have a Live Streaming Experience on HSN.com and it was one of those, you know, Click Here for a Low Byte Rate, which was probably a 28 or 30 K type of boosted style video at a High Byte Rate, which was probably about 150 K.

And, at that time, you know although we tracked measurements, you know, the number of people that watched that Live Streaming was probably in the 10’s.  Today with all our Live Streaming on HSN.com it’s in the 1000’s.

We have over 13,000 products that are Live on HSN.com with video.  Once again, these are all clips that have been recorded and processed off the Live Linear Channel.

We also upload all those clips, in an automated fashion, to YouTube.  So we have, actually, all of over 40,000 clips over there.  And our infrastructure, which is a combination between Build-and-Buy, comprises of Best of Breed and a lot of custom work.

It’s important…it is for us, in everything we do around Video, since it’s all Live, if we miss an opportunity of Video Capture, there’s no way to actually go back and replay it.

So we do a lot of things as far as redundancy and captures, you know, within Servers, outside Servers and also Storage after Video.  Here are just a couple of…sorry, I don’t have any cool videos, but, here are a couple of Screen Shots of two examples of how we embed video.

The top left-hand side is “ON/OFF” got it Detail Page.  One thing we didn’t want to do is to make it very intrusive.  So the customer is browsing like they normally would.  They get to a product that they are interested in, they have multiple, perhaps views, of the product images, larger image views.  They can zoom in… and if a Product Video is available for that particular item, you’ll see an actual icon that identifies it as that.

Once again, all of this is automated, so literally within two hours after the clip has aired on TV, it gets processed and gets attached to a Product Detail Page.  So we don’t have to have three shifts running and processing videos.

The other thing, also… at the bottom of the Slide…you’ll see is that we have a different presentation as far as Promotional Videos or any Upcoming Shows that we want to get.  So this is Carousel where we can load videos, so that a customer can actually see, perhaps, Celebrities that are coming up, or, (inaudible) we actually have.

In all the stuff this year, we launched our HSN.TV HD (inaudible) Streaming Experience.  HSN.TV Site has been around for awhile.  We launched it with Silverlight 1, to begin with.  And, when we went to HD, over the air, over our Linear Channel, a couple of weeks after that we actually went HD also with a Smooth Stream.

There are multiple Bit Rates that we support.  We support all the low end of 550 Kilobytes bit rate.  We’ve got some 550, 850, 1350 and 2850.

The great thing about it is that the user doesn’t have to figure out, you know, which bit rate what there bandwidth is like.  It automatically adjusts, depending on either Network Congestion or what bit rate they are in.

And this is really important, because what we find is, people will interview watching video at work, where there maybe bandwidth restrictions and…or they can be watching it at home.  So depending…you know, you take that out of the equation and the experience really scales quite well.

You’ll notice on the right-hand side, it’s a little bit tough to see on that, but, this is actually 16 X 9 Aspect Ratio and there’s…the HD is off to the right.

So if someone is watching this on an SD Broadcast, you wouldn’t see that, kind of, third to the right and there’s additional HD Only type programming that would appear over there.

We also have a VOD Experience over here.  We also launched in August, our iPhone App and that’s been really, really successful.  We have Live Streaming, we have the last 15 products and we have a little bit of a fun feature, which is a game that someone can actually play along with.

And, finally, in wrapping up and we will probably talk more about this in questions, is, Video is really, really important to HSN.  We do a lot of things from Set Design all the way down to Presentations that we want to make sure that we carry through in all the Experiences that we actually do.

It’s just important that no matter what you do, make sure that, you know your customer.  Make sure that the content is focused and targeted towards what they want, and do your Research.  Thank you.

Justin Foster: Thanks Gerry.

<Applause>

Right now we have Rico, from Zappos.  Let’s give him a hand.

<Applause>

Rico Nasol: All right, I will keep this quick, so we can get to questions.  So, I’m from Zappos.com, we just celebrated our 10 year anniversary this year and we have been around since ’99 and we’ve since moved on from Shoes.

We do apparel, we do Bags, Jewelry.  We do Coffeemakers; we do Electronics, Home Goods, all kinds of good stuff now, so, enough of that onto the Video stuff.

So, Video for us is huge.  We see huge SEO Values in…within Video, especially if you can get it Transcribed, or if you have like Company Articles with it.  It is huge to save money on your Paper Click.

One thing that Video is also good for is for the Customer Experience.  For us we kind of, our Trademark before was MultiView, we’re now with the product Videos.  You can… it’s another way the customers can hold a product.  They’ll see somebody wearing it; they’ll see somebody with it on the flit, Product Demonstrations, things like that.

It just gives the customer more idea of what they are getting and more confidence about what the product they’re buying.

One thing we do also is get our culture through in our Videos.  We do everything in-house so we want to make sure that it’s captivating to the customer.  That we don’t do anything longer than 90 seconds, we try to keep it between 30 and 90 seconds, so it gets the customers attention and then they get interested in and they’re out.

But we do display our culture, if you guys are familiar with Zappos as a Company our philosophy is “if you get the culture right the rest will follow.”  So, we try to do that in our Videos as well.

One thing also that’s good about doing Videos in-house is our customers have unlimited access to it.  A lot of companies came to us, “We can create this concept for you, but we will sign you up to a contract,” you know, per view and things like that if they hosted and created it.

For Zappos the traffic we get, and the Clicks that we get, it didn’t make sense for us to pay per Click that we get, because some people come in just click on Video; see what it is and just leave.  And that’s, you know, it doesn’t help conversion, but it will just cause us to have to have to pay more for people that are just coming through and clicking through our pages. So hosting it in-house makes it to my next point “Cost Effective.”

And we’re able to do the videos with our own staff.  We have…currently we have 10 people in Kentucky and we have 4 people in Los Vegas doing strictly Product Videos.  We do it in-house; we don’t have to pay for anybody.  We don’t have to pay hosting fees and it’s really cost effective for us and we can keep all the costs and use that towards Marketing.

And one thing that we value the most of all this is “Unique Content”.  We want to captivate that customer again and we don’t want any other Retailers to have access to our Content.  And we don’t want to be syndicated by anybody else.

Some of the Organic Traffic we have some affiliates in other areas or Syndicate Sites.  They’re ranking higher than maybe you’re ranking.  And one thing for us we want to keep it in-house so we can control who gets that and we control the traffic for that.

Also we have all the Rights to the Video so we can put it on YouTube or whatever other channels we want to.  We can do what ever we want with that stuff.  So Zappos’ approach to Video Landing Pages, I will give you guys a preview of that, with our Nike Page.  We’re just kind of experimenting with the New Customers Experience and I’ll get… let you guys to see that.

Product Pages, that’s our focus right now.  Currently viewed today we have over 8,000 Product Videos on the site and they’re all, like I said, about 30 to 90 seconds long.

Educational Videos, the “How Too Site” is a fairly new venture for us.  It is still in its infancy.  We have, maybe, all 40 Videos on it.  But we’re hoping to rev that up in 2010.

We’re working on some back-end things and we’re trying to get the look and feel right before we completely launch it out.  And then Zappos insights that came about, because a lot of companies, they still do come to our office; they want to see what Zappos is all about.  They want interviews with Tony or any of our Managers.

So what we did is we created this Subscription Site where we have exclusive interviews with Tony.  People can call in chat, things like that and there’s a lot of Videos from people who were there from day one.  You know, employee number two with Zappos, still with the company today, having questions on how we’ve scaled our culture from 40 employees back then to over 1300 employees now.  Keeping the same culture; keeping our business practices and everything still in sight.  So that’s where that came from.

And then, our Blog Site is kind of our personal experiences, our connection to the customer.  They get to see what an everyday life is like at Zappos.  Yes we do have Parades and Parties but it’s not what we are all about.  We work really hard in there and you can see some of that come through on our Blogs.

Here is an example of a Landing Page, our Nike Landing Page.  So we have…we’re working with Overlay.TV, we’re in the process of launching a new Player.  This is kind of a Preview of it here and it’s actually Live.

So you can click on any Video that’s on the Page here and within that Video if you see something that you want to purchase.  A shoe, a shirt or shorts, you can actually click on that.  The Product Information will actually show up on the screen and then you can click on it again and it will take you directly to the Product Page and then the customer can buy that Product.

They can also submit there own testimonials, so if you see right there, where the settings is…it’s kind of dark, you can’t see it.  But if you have a Webcam or all Mac’s have Webcams, you can actually create a Video Testimonial and submit it to our Site to be posted on Zappos.com.

Those are some of the cool things we are working with right now Online in pages, and then, an example, of our Product Video.

<Sample Video played to audience>

Side shows are also, you know like, driven to be cost effective because those are all Zappos employees in that Video.  So let’s see…All right so… and this is just an example of our “How To” site and our “Blog” site, so that you guys can just get a look at it.

The “How To” site is, like a said, it’s in its infancy so that’s going to be changing and will look completely different next year. Some of those will also be seen in Product Descriptions, we seen pretty big increase for a Site our size.  We’ve seen from 6 to 30% increase in conversion rates from Products that have videos, and that’s why our main focus is still to be on Product Descriptions.

90 Pages…you know…when you increase the customer interaction.  Just like with that Nike Page, you know, customers can go there and have a full video experience.

Right now we’re still working on a balance on whether our customer wants the Video Experience or Directly to Product.  We still have those Zappos customers that want to be directed straight to Product, they don’t want to mess with videos.  But right now we’re researching that and trying to figure out what the correct balance is for that.

In Zappos “How To” and “Blogs”, again, you know, it increases our Organic Traffic, it lowered our Pay per Click Costs, because, you search, you know, Zappos in certain Key Terms.  If our “Blogs” don’t show up our Product Pages will show up, or our “How Too” sites will show up.

And again, I can’t emphasize this enough, to show off our Customer Culture, Zappos fans are Zappos fans for life.  So we want to have them get the inside look on how we are.  And so some things for 2010, just trying to wrap up, we have a pretty lofty goal for next year.  15,000 Product Videos, that’s just Product Videos.  So on Page Product Description Videos we can add about 3,000 to 5,000 more if you’re including “Blogs” and “How Too” Videos for next year.

More Landing Page Videos, so like the Nike Page we want to have more Pages like that.  And we’re also going to increase our Teams in KY and LV.  The KY Team will be upped to about 30 employees next year just for video, and we’re hoping to have about 5 or 6 here in Los Vegas who is not in Los Vegas now, so they’re in Los Vegas.

And we’re also building our new studios.  We currently have 3 Video Studios in Kentucky and 1 in Vegas.  We’re going to build one more in Vegas and 5 more in Kentucky.

So we are going to have 10 fully functional Video Studios with…that are fully staffed year round.  And we’re also going to do…have a greater focus on overlays.  Like, I was talking about we’re going to have, we’re launching a new player.  All our videos are going to be done with overlays.  So if you see other Products, we’ll have Full Outfits or we can have Home Décor and you can buy the flower set, you can buy the pillow, you can buy the mattress cover…anything like that all at one time, just by watching the video.

So that’s kind of where we’re going right now.  And so Video is going to be huge in 2010.  It’s huge now.  My advice, if you know, any one here wants to hear my advice, it’s just…I think Videos are really important.  If you can’t create Video in-house, get any kind of Video, because that’s the way everybody is going.  You know, it captivates customers and they just want to see more and hear more, not necessarily read.  But they want to see more about it…so if you can get Video on your Site in any way, shape or form I would advice for it, so…thanks.

Justin Foster: Thanks Rico.

<Applause>

All right so we’ve actually got about 15 minutes left.  What we’re going to go ahead and do is I’m going to just ask each Panelist one very brief question.  Please take about 30 seconds to answer the question and we’ll go ahead and open it up to the audience.

So the first question I have here is for Jason.  And Jason, we’re going to want to try to understand a little bit more about the incremental conversion rate you’ve been able to drive from Video on your Product Detail Pages.

You know one thing I think is a little bit interesting is Gerry, for example, they’re putting TV Content directly on the Product Detail Page.  Now you guys are sort of shortening it up a little bit, making smaller clips.

Are you seeing, like, certain things within the Video driving increased performance, versus, what is causing some Videos to do better than others?

Jason Arend: Yeah, absolutely.  It’s been weird because it seems like a lot of Best Practices for things and the Western or this Rural Industry, kind of fell apart.

What we’re seeing, actually drive conversions more than anything, is a relevance to Lifestyle.  The more, that, we can talk about Lifestyle and see how that Product can improve the activities that are part of our customer’s lifestyle.  That’s where we’re seeing the biggest increases on Products.

Jason Foster: Great…very cool, now a question for Mike.

So Mike I noticed one of the really interesting things that you’re doing right now on Hot Topic, is you’re actually taking…or may Tord?  I can’t remember if it was Hot Topic or Tord, you’ll have to remind me.

But you’re actually replacing the Product Hero with a Default, sort of Video View.  And I am wondering, just how is that decision made and just think it’s really impressive how you are able to drive that really high View Rate.  Do you think that the decision to feature Video in that way had a lot to do with it?

Mike Sullivan: Absolutely, I think that the more frictionless you can make that shopping experience; the more likely that Tool is going to be used.

As you can see we have the iMag, there is another button there that says Video and, you know, we weren’t promoting it anywhere else on the Site.  We weren’t saying you know…we weren’t saying you know… look at our new videos.

It was just something that was there and it was Organic that we have such a high viewing rate on that.  So, you know…that indicates that it is working well.    And I think that we wanted to keep it in the same frame space though, just to keep the cycle consistent with pages that didn’t have the video.  And to, again, make that as frictionless, as seamless and as consistent as possible.

Justin Foster: Cool.  I’ll go out of order; I’ll do Rico first, just because we are all sitting in that order.   So, Rico, question for you.  It seems like a really big drive at Zappos right now is adding more interactivity to the Videos.  So I’m curious if you’ve done any research to show that if you add interactive elements or overlays, hotspots, these types of things in the Video content, the Video actually performs better?

And then, beyond that, because the second part of the question is…

Are you planning on launching that interactivity everywhere?  So is it going to be, sort of, on your Landing Pages, like you’re doing right now?

Is it also going to be on your Product Detail Pages?  And what is, sort of, driving that decision?

Rico Nasol: Well we’ve seen a lot of interaction with the customers that do interact with our Nike Boutique, they’re clicking on everything.  You know, I don’t know if it’s new to them or not, but, they’re going in there, they’re clicking in, they’re going to Product Pages that are featured in the Videos.

And, we see a lot of experience of the Balance Rates lower, so we just want to move towards that direction.  Again, like I said, this is all about finding that balance.  We want to feature products still, because there are those customers that do that.

But, we’re planning on going all out with Overlay and we want to do it on our Landing Pages, we want to do it on all Product Pages.  So…like if we’re talking about a particular shoe, and I’m wearing a particular outfit that you can buy on Zappos, we’re going to make that available to our customer to buy, even if they just clicked on that Video just to see the shoe.

You never know.  There are some things in Videos that I find, that I wasn’t looking for, but I’ve wanted to know where to buy it…so I think it’s just across the board.  Overlay is going to be a huge thing for us in 2010.

Justin Foster: So do you think that Overlay, that is it going to be when you’re actually showing within the Video itself, like an outfit?  Or is it going to be your just knowing, sort of, what products are related to other products.  You’re going to have, like, thumbnails or things like that?

Rico Nasol: We’re going to do it in “awe spec” so, some we’re going to specifically do outfits.  We’re working on our Outfit Building now.

So, you can, you know, one Click and you can buy all five things on that Page, or, you know, you can buy the individual things that you want.  But, we wanted, we don’t want to focus on just, you know, single…specifically single products or multi-products.  We want to do it all, because, again we’re going into Home Goods, so if you want to buy a set of Flatware with Dishware; with a table cloth and all that stuff, or if you want to buy the Cappuccino Machine with the Blender and the Food Processor that are all in the kitchen, you know…we don’t want to limit ourselves in that regard.

Jason Foster: Cool.  And Gerry, so, we didn’t talk about it too much in your presentation.  But one of the unique things that HSN is doing is doing a lot of Live Streaming Video right now.  So I am just curious, moving forward do you see Live Streaming Video becoming a more important part of the Company’s overall Online Video Program and based on what you’re saying right now is it a large contributor to the Online business and to your overall business?  Where do you really see that headed?

Gerry Johnson: So…yeah, definitely.  I mean its…its…the evidences by us continue to invest in a lot of resources and money into improving the quality of the Stream, and also making sure that experience that branded experience is in a lot of Platforms.

So, we started off on HSN.com, we’ve taken that Stream and we have, we have a Live Stream, on a, kind of an HSN MySpace Page.  We have an HSN.TV which is this…a little bit of a different shaded experience.  But soon you’ll actually see that experience embedded into our HSN.com Site.  And you know we do a lot of, reporting and metrics around it.

The important thing to do, to remember, at least it is for us, is that, you know, we don’t want anything drastic or jarring that may effect the customer.  We are very, I won’t say trained, but, they are very habitual on finding things in certain places and how they actually go about navigating.

So everything we do, we test, we do AB Testing on it, even when we were launching our Product Detail Clips, we did a lot of that testing.  It proved actually very positive, so, we rolled it out throughout our Site, and we’ll continue doing, prove and increase and deliver that same experience that we put a lot of effort to broadcast.

Justin Foster: Cool, great, we’ve got about 10 minutes we’ll go ahead, we’ll open it up to questions from the audience.

<Audience Question Inaudible>

Rico Nasol: Yeah, it’s still really young.  We’re still trying to figure that out.  We have our own analytics software built in place and we’re doubling that with Google Analytics.  So, we’re still looking for that same answer, you know, like we try not to clutter our Pages.  We want a clean Page for the customer to see, but if they do want to find the video we don’t want to make it so that they can’t find it at all.  You know what I mean?

So the overlays are really subtle, so, it’s not like when it comes up, it’s going to be really blinding or anything like that.  It’s only if you click on the Video and then you have it over the thing your want, then you’ll see something to click on.

So it’s not really distracting in that regard, but again, we want to keep it clean and we’re still trying to figure out what interaction is best for the customer so… if you find out let me know.

<Audience Question Inaudible)

We mainly use Royalty Free music, but we do have a lot of musicians in-house, it’s something we have talked about, I’m having people do that.  And the things that’s good about…that’s good about with Zappos, is we have so many employees.  Like a lot of the film people we have, like the video people we have now, we didn’t find…like we didn’t…hire for them necessarily, they were just people we had on hand that were interested in Video.

And so we started developing our teams that way and it’s just kind of organically grew that way…so…

<Audience Question Inaudible)

Gerry Johnson: We’re doing a little bit of music in-house, but mostly Royalty Free music as well.

Mike Sullivan: Yeah, we do…we have such strong relationships with Artists and labels, that, you know…it’s very accessible to us, so typically we’re using either…well for ShockHound we’re using, you know, Artist Music and stuff that’s actually on Label and for Hot Topic a lot of outside Bands and things like that.

<Audience Question Inaudible>

Mike Sullivan: The heavy…the contents?

<Audience Question Inaudible>

Rico Nasol: Oh…for overlay that…I can’t…you’d have to ask Overlay.TV I…we have a Back-end Tool that they built for us.  So all that technology’s on their end and we just input what Products we want to show on the actual Videos and then they have a Back-end Tool that they created for us.

Gerry Johnson: A comment on the way that it will be done, is there’s usually a Data Feed that you can generate of all the Products, Product Metadata, Thumbnails, Price, Specials, Descriptions, all this type of stuff and then, we’re able to associate that with the Video Contents.  So use that to dynamically hover, like, Thumbnails or Descriptions, Ratings, Reviews that type of stuff…Video Player…

<Audience Question> What do you mean in terms of format?

Gerry Johnson: We just use mainly an Xml Feed, but nothing special.

Jason Arend: So that’s actually a good question before us, I mean we look at Video as just another piece of metadata of the 100+   that’s associated to a Product.

But actually, there’s a lot of metadata in the Video itself, right?  I mean…we’re looking at things like, extracting Close-Captioning or a lot of information where the conversation may be focused around the Video and trying to extract that out and trying to make that searchable.

<Audience Question Inaudible>

Mike Sullivan: You know what?  We didn’t roll it out in the correct way so we went “We want to get Video on Product Pages and let’s do it, and this would be a cool way to do it.”

You know I think at Hot Topic, a lot of times, we acted instinctually and if we know at the core in our gut that it’s a good thing to do we’ll go and do it, and then, try to figure out, you know, sort everything out afterwards.

But, you know, that is definitely something that we’ll be doing.  We’ll be doing, maybe, testing.  Part of that’s a technology limitation that we have.  But, we felt it was good to give a try and then the engagements were high so that’s encouraging.

<Audience Question Inaudible>

Jason Arend: I actually don’t have that off the top of my head at the moment.

Mike Sullivan: It varies agreeably, probably 60 or 70 thousand a week, something like that, that’s off of one (inaudible) at ShockHound, most of the other stuff’s on YouTube.

<Audience Question Inaudible>

Yeah…60 or 70 thousand.

Rico Nasol: I don’t want to do the math vertically <sounds like> but our files are anywhere from 3 to 5 Megs and we have over 8,000 Videos on Sites.

Mike Sullivan: I thought that was Views not actually bits.  Yeah.

Jason Arend: And I would probably say that we easily have over 100 Terabytes worth of Content and monthly probably 10+ Terabytes of Streaming Video.

<Audience Question Inaudible>

Gerry Johnson: For us what we’re finding is the name of the Video, the Title Tag of the Page itself, and the text around it is the most important.  It’s really no different for the most part than any other On-Page SEO and back links of course so…are you seeing other…?

Rico Nasol: Yeah it’s the same answer, it’s just, and you know Searches are now putting a bigger emphasis in their Logarithms’ with Video so…like you were saying the Tags are Titles, you know so…<inaudible>

Gerry Johnson: But…but certainly the Text around the Video is probably about the most important.

Rico Nasol: For us on…on Product Pages is the more the Description, but for our “How to” Sites and our “Blogs” there’s…it’s usually associated with an Article or it’s Transcribed.  So that adds to the On-Page SEO Values.

Justin Foster: You definitely think Transcriptions are a really big thing?

Rico Nasol: They help with SEO.

<Audience Question Inaudible>

Gerry Johnson: For us, we make sure before the actual Video Description is put in that we have the Link directly to the Product Page.  So you would have the Video, the Link to the Product Page and then the Description of what’s in the Video, and that’s kind of how we’re dealing with it at the moment.

Rico Nasol: Yeah, we have that.  We also take advantage of annotations and YouTube so…they can, you know, if you want to buy this Product “Click Here”, and then you can just put in your Product…you’re Page Link.

Jason Arend: Yeah, we do the same thing also; the…it’s… the added benefit is all our Videos are HSN Branded and have all the information about the Video burned into the Video itself.

So even if the video was lifted off YouTube, or whatever it is, you know, you have Item Number, Telephone Number, HSN.com branded.  Everything is in the Video itself.

Justin Foster: Is anybody here, out of curiosity, doing any Repurposing of your Video Assets as Ads, do any retargeting with Video or anything like that?

Gerry Johnson: We are In-Store, we are creating In-Store Displays with that same Video, where you can be walking around our physical Retail Stores and we’ll have Video Support with the Products that are there, not actual advertisement tools.

Mike Sullivan: We’re doing something similar.

Justin Foster: And did you say, Jason?  Are you guys doing the Promoted Videos Program on YouTube right now?

Jason Arend: Basically we can actually, you know, buy space in the YouTube Videos, you know you can actually put your own Link there, drive Traffic to your Product Detail Pages.

Gerry Johnson: We are not.  Not at the moment.  I am not sure if they have opened that up to everybody have they?

Justin Foster: Yeah they just did, it was like a couple of months ago. Yeah.

<Audience Question Inaudible>

You can now if you are participating in the YouTube Promoted Videos Program.  Just about, it was maybe about…it was 3 or 4 weeks ago, they actually changed it, so you actually can…you actually can do it now.  You can put your own Links in there.

Before, with the…with the Click to Buy Program, I forget what they call it, it was “Pay Click”, I think it was “Click to Buy”.  You could only do 3rd Party Ads, but now you can do your own.

<Audience Question Inaudible>

Justin Foster: So the question is “does anybody here actually syndicate your Video Content to other Sites and I’ll actually tack on my own question to that.  Which is, “are you seeing, sort of, any SEO cannibalization while you’re actually dropping the ranking of your Product Detail Pages, by having, sort of, your Videos on these 3rd Party Video Destination Sites appearing in the Universal Searchers that all seem cool? <sounds like>

Gerry Johnson: For us the answer is “Yes and yes”, we are syndicating out to a lot of different Sites.  We caught the SEO cannibalization issue really early on and figured out some good ways in dealing with it.  It still happens occasionally.

Mike Sullivan: We’re syndicating out to a lot of 3rd Party Video Sites.  We’re looking at actually, possibly doing some Partnerships with other Publications, which we are not doing yet.  In terms of cannibalization, you know, once in awhile, it’s not that as big of an issue for us as…because we are not doing that Direct Sale, you know, it’s more the Brands Sale.

Rico Nasol: Yeah, at Zappos we don’t do much Syndication outside of just putting stuff on YouTube.  We’re possibly looking into it for 2010, but it, we’re going to have to see if it makes sense for our business first.

Justin Foster: Well its 3:45, we want to make sure that we end on time.  We’ll go ahead and we’ll stick around for a few minutes afterward.

Everyone please give our Panelists a big round of applause, thank you guys.

<Applause>

Happy Selling!

1. Use interactive video only when you have confidence the viewer wants to engage. Note I didn’t say when *you* want the viewer to engage.  Shoppers don’t care about what you want. Your job is to use video to motivate the shopper.  Interactivity can drive the action.
2. Use interactive video only when it adds value to the shopping experience and moves a shopper closer to the transaction. Ignore the marketing hype around interactive video and instead focus on how you can use video interaction to create sales.  Interactivity doesn’t always make sense. For example, you may want to limit interactive video on product detail pages unless you’re triggering the shopper to add the product in the video to his or her shopping cart.
3. Make interactive video brain-dead easy for the shopper. We’ve all grown up passively consuming video content, so simply expecting shoppers to engage just because you’re using interactive video technology may not be realistic.  You have make it easy.  Consider telling the shopper (in-video) that links can be clicked in the player, if there are other options available to click in the player they might find useful, such as related products, reviews and ratings, etc.  Also, be careful with “hotspots” (hotspots are also commonly referred to as “clickable video.”)  Strong visual cues, text calls-to-action, or spoken prompts may be needed to maximize the use of hotspot technology.
4. Measure, measure, measure. Some retailers make excuses by saying interactive video is too “new” to warrant measurement.  Such attitudes not only work against a video commerce program - they’re downright dangerous.  It’s only through the process of experimenting and measuring that retailers will learn how to effectively employ interactive video.  In addition to measuring video CTR (clickthrough rate), CVR (conversion rate) of those that click, engagement, and other standard video metrics, retailers need to test interactive video elements.  When is a “Buy” prompt most effective?  Does a thumbnail of a product convert as effectively as a text call to action?  Do most people click a minute into the video or ten seconds in?  Do certain types of feature callouts in video drive higher interactivity than others?  How do different players impact interaction, conversion, and sales?  Do the presence of ratings or reviews in the video improve interactivity?  Do callouts create high levels of interactivity, only to kill conversion rate?  Do people respond well to related videos or playlists? Do people interact more with a video when the default thumbnail in the player shows a certain part of the video content?  How does the callout “Add to Cart” perform relative to “Buy Now?”  Etc. etc.  While the number of things to measure might seem daunting, a good video platform will help automate much of the testing and optimization.

Example from Zappos.com / Overlay.TV includes highlighted hotspot over the shoes, clickable share and info tabs, and a hotspot that pulls up an in-player product description.  Also prominently featured is a list of products showcased in the video.

Example from eBags / Liveclicker shows highlighted hotspot, clickable in-video text.

Example from Mattel / ConciseClick shows multiple products featured in the video player, highlighted share options (embed/Facebook).  Hovering the mouse over a product reveals its name and current price.

Example from Costco / Liveclicker with standard lower 1/3 text overlay directing shoppers to product detail page on Costco.com

Example from Zappos / Overlay.TV shows in-player thumbnail, product description, “Get It!” button, interactive timeline.

Example in-video floating product name/price on mouse hover from Mattel / ConciseClick.  The products displayed to the right of the video also update dynamically as the video is playing.

Example of clickable related products in-player from eBags / Liveclicker w/rating stars.  Product recommendations served contextually.

Example of REI player with clickable Facebook Share.

Example of clickable related videos / playlists featured in-player

Do you have an example you would like to have featured in this post?  Email me at justin [at] video [dash] commerce [dot] org and I’ll post your example - or include it in the comments below.  Until next time…

Happy Selling!

General Takeaways from this presentation:

- PFI Western has proven that it doesn’t take a huge budget to blow out video commerce across marketing channels.  They cover almost all costs with co-op and advertising dollars.  All infrastructure developed by 2 people with no budget.

- The company chose an innovative approach, starting with television by buying airtime on a cable TV network and featuring products in a QVC/HSN style broadcast, then repurposed that content for the web.  100% self-produced content.

- 500 pieces of unique video content.  Over 55 half-hour television shows online.

- 50% increase in conversion rates.  27% reduction in returns.

- 25% of daily site visitors now watching video.

- Increase in average order value, longer average time on site, increase in return visits.

Need I say more?  Well, maybe… interested in knowing how PFI Western achieves these results:

- Employ multi-channel video strategy (TV, video commerce site, in-store displays, product pages, landing pages, syndication to video sharing sites, syndication to social networks, email campaigns (2-3X clickthrough rates), RSS feeds, mobile, podcasts)

- Strong SEO results - often ranking 9 of the top 10 video results in Google, randing over 90% of first page video results in Bing and Yahoo

On another note, it was a pleasure getting to know Jason Arend, the brains behind PFI Western’s video commerce operation.  The amount of work his team has done (and the results they’ve managed to achieve) put most “Top 50″ retailers to shame.  The industry is fortunate to have retailers like PFI Western to blaze the trail and prove the potential of video in e-commerce.  Nice work, guys.

Until next time -

Happy Selling!

Over the next few days, I’ll be sharing PPTs from the panelists as well as video interviews here on video-commerce.org. Below is Rico’s presentation.  Along with his presentation, I’d like to share a few highlight takeaways:

- Zappos has 6 video studios currently, will have 10 video studios in 2010, and is aiming to create 50,000 product videos by the close of 2010.  I’m unaware of any other retailer outside of the video production companies (HSN, ShopNBC, QVC etc) with greater ambitions.  Clearly Zappos thinks video is the future of online retail and is putting their money where their mouth is.

- Big value of video for Zappos is SEO - they do transcripts and follow other video SEO best practices

- Consistent increase in conversion rate - “significant increase”

- The only way to do video is self-production - “better control, conveys the brand better, offers the ability to differentiate through video rather than use cookie-cutter manufacturer video content”

- Work with automated video production company TalkMarket to speed development of video

- Interactive video is a big push - use of overlays, thumbnails, etc.  Results still TBD

- Rolling video out to product pages, landing pages.  Specialized sites (ZapposInsights.com, Zappos.TV) are secondary in focus.  Product detail page very important

- Jury on video syndication is still out.  Syndication has to be done “intelligently” so videos drive traffic to product detail pages rather than cannibalize results of product pages in Google results.

Enjoy:

If you’re an online retailer, I have a challenge for you.

When a consumer navigates to a specific product page, it’s fair to assume that he / she has moved pretty far down the purchase funnel, right?  If that’s the case, then the role of the product video is to educate, describe the product, and show multiple features that cannot be displayed in a few product pictures.  That’s according to a recently released Forrester report.  And I agree.

In my opinion, videos that are straightforward, clearly describe features / benefits, and explain who the product is for will drive the highest conversion rates.  However, some manufacturers insist on creating product videos that feel more like 30 second TV commercials with flashy graphics, over acting, and high-energy music.  Why is that?  Clearly, they must think that this video style converts better.  Does it?  If there’s data out there, then I’d like to see it? Anyone?

This is an area that screams for more data.  In fact, I’d be willing to produce each type of video for free in order to run a side-by-side test. If you sell products on your site and would like to volunteer for the test, then speak up now.  After the test, I’ll post the results right here for all to see.

What do you think the test results will show?

Example auto-video in use by Overstock.com

Example auto-video in use by AdventureLand.com

The Video Commerce Consortium has just released a new whitepaper, “Creating E-Commerce Videos That Sell,” downloadable here. Included in the whitepaper:

- Conceptual Framework for Creating Videos that Sell
- Understanding Motivation, Simplicity, and Triggers
- Producing E-Commerce Videos that Get Results
- Conceptual Storyboarding Approaches
- Benefits and Drawbacks of Various Video Production Methods in E-Commerce
- Product Video ROI Calculator
- Selecting the Right Video Production Equipment
- Filming and Post-Production for E-Commerce Video
- Common Video Production Questions Asked and Answered
- Placing Videos on Product Detail Pages for Maximum Results
- Product Detail Page Implementation Results
- Results (10 examples - some are recycled from earlier papers)

Let me know what you think as usual. No feedback is too harsh!

Happy Selling!

Justin

If there’s one thing I think we can all agree on, it’s that online retailers and product manufacturers want to sell more stuff. So it stands to reason that retailers and manufacturers would do all they can to put video on their sites, right? If only that was the case!

We all believe video increases sales conversion rates. Yet adoption lags. In a September post, Justin suggested the lag is due to a lack of leadership. While that may be the case, I think there are number of factors in play. The one that has been on my mind is the question of “who pays?”

eMarketer and Internet Retailer report that video is a top priority for retailers, yet some (many?) feel the manufacturers should pay all the costs. Why is that? Why would retailers want manufacturers to pay for video that will enable them to improve sales conversion rates and sell more stuff?

Having spent the early part of my career in sales and marketing with Procter & Gamble and General Mills, I believe the reason has to do with the long time practice of brick & mortar retailers charging manufacturers slotting fees for new products and merchandising fees for end aisle displays. This practice makes sense in the physical world because the supply of shelf space and end caps is limited while manufacturers’ demand for this space is unlimited. Any economist will tell you that this scenario creates tremendous power for the retailers. They use it – why wouldn’t they?

However, in the world of ecommerce, shelf space and to a lesser extent merchandising space are virtually unlimited. Retailers don’t have to limit the number of products they carry due to “shelf space constraints.” And they don’t have to ration merchandising opportunities (such as product videos) the way they ration end aisle display space. This means that supply pretty much equals demand. Yet, some retailers wait to put video on their sites in the hopes that the manufacturers will step up and pay.

In order to rapidly advance the adoption of ecommerce video, I believe both parties need to contribute because both stand to gain. Manufacturers should pay to create video and make it available for syndication because they directly benefit from the product exposure. Retailers should pay the costs associated with hosting and streaming because they directly benefit from the increased conversion. If retailers and manufacturers meet in the middle, then both will sell more stuff and make more money.

What do you think?

I just returned home last night from the Shop.org Annual Summit where I spoke about how e-commerce retailers could make more money with video “in a week.”  One of the more powerful moments of the presentation was the opening. I asked the 500 or so in attendance the following three questions:

First, “Who believes online video is an effective way to sell products online or persuade shoppers to buy?”

Nearly everyone raised their hand.

Then, “Who is using online video in some fashion today to sell?”

About 3/4 of the audience kept their hands up.

Last, “Who is using online video as extensively as you would like?”

Fewer than 10 hands remained up.  I think I counted 4 or 5.

For some time, I’ve been thinking about what’s been preventing video from taking off more broadly in the e-commerce space.  It’s a topic I come back to often here, but unfortunately it’s an issue that hasn’t yet disappeared.  The experience I had at Shop.org clearly showed that e-commerce has a long way to go until video commerce reaches its potential.

Without a doubt, 2009 has already seen many new innovations within the video commerce space.  From the increased adoption of automated video solutions like TalkMarket and SundaySky, to newfound demand from retailers sourcing video content from manufacturers, experimentation with different styles of video production, and efforts to integrate video more deeply with social media, retailers are working hard on their video commerce programs. Still, the fact remains: the vast majority of retailers (even those with significant investments in video) do not view video as core to the business.  Retailers still struggle with high production costs, internal political struggles over video’s ultimate role (entertainment? sales tool? education? customer service?), lack of vision, accountability, underinvestment, and, in my opinion, hugely underwhelming leadership.

On the one hand, it’s hard to blame folks for being slow with video.  Even though it’s becoming increasingly difficult to refute that video boosts conversion rates and clickthrough rates, video still fails the “CEO Radar Test” in far too many e-commerce organizations.  Consider for a moment that your company suddenly decided to stop sending out email campaigns, or buying keywords, or that all of a sudden the decision was made to take your shopping cart offline for a week. In the e-commerce world, decisions like these would almost certainly percolate up to the CEO - or at least the VP of E-Commerce.  Why?  Simple.  Dollars and cents.  If video were to disappear from your organization tomorrow, would the CEO notice?  Be honest!

Of course, as a reader of this blog you are likely one of the industry’s forward thinkers.  You are out to innovate, to differentiate, and to accelerate your company’s performance.  Just as email didn’t appear overnight, nor did search, neither will video.  It’s going to be a bumpy road or a wild ride (you pick).  But the companies that do innovate will be in a much stronger position when it comes to building customer loyalty, increasing the quality of the shopping experience, and showcasing the kind of thought leadership that will be required to keep today’s increasingly fickle shopper happy while ushering in the new wave of millennials - not to mention a broader population that’s becoming more and more accustomed to consuming video as part of the everyday online experience.

The fundamentals of video are strong.  Directionally, online retailers are overwhelmingly headed down the path of more video (as opposed to less video).  Now is the time to step up the leadership and make it happen.  I can’t wait to report on some of the video experiences launched during this Q4.  Until next time -

Happy Selling!

I’ve noticed an emerging trend over the last six to twelve months among specialty and mass merchants with regard to manufacturer video.  The discussion over whether video “works” as a product merchandising tool began to shift away from one centered entirely on improving conversion rates.  In fact, as more retailers discovered manufacturer video content available in relative abundance, they began to view video as more than a simple conversion enhancing tool.  Now, some retailers see video as a new source of revenue unto itself.  What’s behind this behavior change?  Nothing other than the almighty co-op dollar.

Manufacturers have long paid retailers for prominent product placement in the offline world (think: supermarket shelves), and the trend certainly extends to the web.  Merchants routinely pay online retailers to run special promotions highlighting their products. Some retailers even have full-time staffers devoted to “vendor marketing.”  The advantage to retailers, of course, is that product sales subsidized through vendor promotional dollars enable the retailer to either slash costs to become more competitive,  boost margins, or both.  It’s all Retail 101.

Enter video commerce.  With the growing interest in e-commerce video among retailers, online retail marketers are now beginning to change their behavior and attitudes toward manufacturer video content in meaningful ways.  No longer is video perceived to be as difficult to produce or acquire as it once was. Those problems still exist to be sure, but in the desire to make video scale more effectively retailers are now figuring out new ways around old problems. In addition to the growing trend toward self-production of retail video content, many retailers have taken a second look at the way they acquire manufacturer video content in an effort to broaden their video libraries.

Historically, retailers acquired manufacturer videos through “syndication networks” - companies that distributed video on behalf of manufacturers to several retail sites.  So, for example, Sony might partner with a company to distribute their video to both Best Buy and CompUSA.  It’s a “win-win-win” for the manufacturer, retailer, and syndication company:

1.  The manufacturer gets to distribute their high-quality video assets to many retail sites - close to the point of sale.  This helps drive demand for the manufacturer’s products while gaining an opportunity to differentiate from competitive products.

2.  The retailer benefits from higher conversion rates on-site from the manufacturer video assets, usually placed on product detail pages or in a “brand store” on the retail site.  Plus, the retailer gets the content for free.  That saves the retailer from having to produce the content on its own.

3.  In the process, the company that syndicates the manufacturer’s video content to the retail site gets a nice chunk of change from the product manufacturer.  The more retailers that work with the syndication service, the fatter this company’s paycheck.

As I’ve mentioned in previous posts and in a whitepaper, the new “law of abundance” w/regard to video in e-commerce is driven by the new, lower costs of producing and distributing video online.  This is a significant new market force reflected in the rise of YouTube. It’s the same force currently disrupting the video commerce world.

For example, retailers can now simply log onto YouTube to discover new manufacturer video content.  Video search engines like Blinkx are another resource online retailers can use to discover relevant product videos instantly.  ExpoTV is an interesting example of a company that built a community of consumers who can rapidly produce product video content at very low cost.  In short, video can now be discovered more easily online in more places.  With each passing day, the volume of online product video content grows.

This newly discovered “abundance of video” has placed retailers in an interesting situation.  On the one hand, retailers are excited to acquire more video content from manufacturers in an effort to drive conversion rates on-site while also scaling video so the overall revenue impact is more broadly felt across the business.  On the other hand, retailers discovered some product manufacturers were willing to pay more to place their video content.  Smelling opportunity, some retailers began entering a “new” market - one formerly occupied solely by the syndication network companies.  In effect, retailers started to act more like a regular web publisher - negotiating video placement deals with manufacturers like a publisher sales rep might sell ad inventory on a prominent news site.

One of the problems with this approach, of course, is that B2B sales is rarely as easy as it might sound.  It could involve educating the retailer’s buyers about the opportunity, some of whom might be reluctant to damage their relationship with key vendors in exchange for a few more dollars.  The other problem is that most retailers aren’t used to amount of work required to close a B2B sale. Despite a retailer’s relatively attractive position in the video syndication market (since the retailer is the manufacturer’s customer), the sheer volume of email, phone, and in-person “follow-up” work, couples with management of the ‘deal pipeline’ could easily be someone’s full time job - something few retailers that view video as a pure co-op opportunity plan ahead for.

The other problem with a co-op heavy approach is that while it may work in some cases, at other times product manufacturers simply aren’t willing to pay the retailer to use their video content.  In other words, retailers that rely exclusively on co-op to drive manufacturer video placement run into the same wall that a sales rep working for a syndication network runs into.  There is a limited universe of product manufacturers that value retail video syndication opportunities enough that they’re willing to pay.

If you’re currently using or planning to rely on vendor dollars to fund your video commerce program in whole or in part, consider the following advice.

Takeaways:

1.  Co-op can be a useful tool to help fund video, but it should be used wisely.  Overuse of this approach could limit the ability of video to impact the online retail business in any kind of meaningful way  (e.g represent a site sales revenue contribution the CEO would notice if missing) since since some manufacturers aren’t going to be willing to pay you for the “privilege” of placing their content on your site.

2. Consider whether the video distribution you’re asking the manufacturer to pay for is already available through a syndication network partner your company works with.  If so, manufacturers may feel like they’re having to ‘double-dip’ since they’re already paying the syndication network to syndicate their content.

3. Consider how receptive your buyers or merchants will be to engaging manufacturers for additional dollars in exchange for video syndication.  Strong buyer or merchant resistance could signal a rough road ahead for your program.  It could also signal a greater need for you (as the program champion) to remain more involved on an ongoing basis, acting in more of a B2B sales role than you may have anticipated.

4.  Before deciding to embark on a heavy co-op approach, consider where your bread and butter lies.  Run an ROI analysis of the expected impact of acquiring new product videos from a conversion rate and sales perspective.  Weigh the expected revenue your business could achieve if it had access to the “entire universe” of vendor video content, rather than just the universe you’ll be able to access if vendors are forced to pay for placement.

5.  Don’t forget the law of abundance which states the cost of distributing video online is low.  If you’re not willing to use vendor video content due to a vendor’s reluctance to pay, remember that your competitor might be. Not only could you lose the video placement revenue, but you could also lose the marketing & merchandising revenue you would have gained for your site as well.  Failing to acquire enough video assets also places additional pressure on the assets you do have to fund your video commerce program.  Having too few video assets could lead to video remaining a low visibility initiative and cause program funding difficulties down the road.

Until next time - Happy Selling!