Ikea Gets Into Bed With New User-Gen Network, Taps Promotion Vs. Ad Budgets

When it comes to marketing to consumers, many big advertisers have already made their bed. Now, in a departure from traditional advertising and promotions, Swedish home furnishings giant Ikea is asking consumers to make theirs. In a promotion that kicks off this morning, Ikea has turned to a new kind of consumer-generated video network that is designed to motivate consumers to interact with and create videos based on their brands. Unlike others who are treating user-generated content as advertising, PR or buzz marketing, the Ikea campaign is based on a very old marketing model: consumer promotion.

The promotion, which is being hosted and managed by Shycast, any early stage company that is going public today with the Ikea campaign, is essentially a contest that offers $5,000 in cash to the user who creates the best online video on making a bed. Actually, the contest asks consumers to "break the rules" of bed-making.

"We're looking for bed-making maniacs who aren't worried about what Mom says," reads Shycast's contest promotion. "If you mix and match sheets, have a special blankie for the Shih-tzu, or the craziest of quilts this contest is for you."

As of early this morning, moments after the campaign went live, Shycast had three video posts: One from Bill showing a bed "making itself; one from Steph, "making my bed;" and one from Robert J. Moore, asking whether, "you can see me" in his bed.

The hope of Ikea and its agencies is that the campaign will prove to be more than just a test bed, and that it will catch on like wildfire, tapping a new undercurrent of competition in the user-generated video space.

"Ikea has a high degree of customer fanaticism. They're a customer brand. Really, what they want beyond that is to get an eye on their real world customers that are engaged and interested in their brand," says Drew Peloso, a founder of Shycast, which is also working with other big consumer marketers including Unilever to scale similar contests and promotions based on user-generated videos.

In his wildest imagination, Peloso, a veteran of other social media ventures, says he can foresee these users becoming quasi celebrity spokesman for the brands they are promoting. "They're talking about customers doing press tours and treating them like endorsers, because they have ideas that the media would like to hear," he says.

Shycast is one of the latest entries into what is emerging as a gold rush of networks seeking to capitalize on social media, and especially user-generated content, on behalf of brand marketers. The schemes and business models vary, but their essence is the same: Find a way to harness the groundswell of the new Web 2.0 marketplace and figure out how to tap into big marketing budgets.

But Shycast does differ slightly from other forays in one significant way. Instead of going after traditional advertising, PR, direct response, or online marketing budgets, it is targeting promotional budgets, an area of marketing that typically has been relegated to the coupon and sweepstakes industry.

"What we are is a framework for a brand to execute contests and promotions in an environment that is safe and secure," boasts Peloso. "They work with their agencies to come up with the great ideas. And we do all the heavy work to manage the contests and fulfillment."

It's an interesting strategy, because most big media companies ignore promotional spending. During the 1980s when markers began upping their promotion budgets due mainly to the rise in so-called "trade" promotions, and it looked like promotional budgets were beginning to cannibalize on traditional advertising, most big media companies developed promotional marketing units to tap into the craze. But in recent years, traditional media outlets have backed away from the strategy. While plenty of integrated media deals have a promotional component, they generally are not earmarked against promotional budgets.

That may help explain why promotional spending has been experiencing only modest growth in recent years. According to Veronis Suhler Stevenson's 2006 Communications Industry Report, consumer promotion spending in the U.S. rose only 4.0% to $44.47 billion last year. While that is a sizeable chunk of marketing budgets, it nonetheless is dwarfed in comparison to a much bigger and faster growing consumer advertising business. According to VSS, advertising grew 6.4% last year to $210.29 billion.

But Peloso expects that relationship to change as the Web creates new, more sophisticated and far more effective ways of harnessing consumer promotions.

It's a contra strategy. Other video networks have launched to tap into the user video experience, but they are focusing in different ways. ExpoTV was one of the earliest, but instead of focusing on traditional advertising, or even promotional spending, the fledgling video network has taken a page out of the direct marketing world, creating the online equivalent of infomercials and video product demonstrations. It bills itself as a "new social shopping destination," where other consumers are the sales force.

Others are leveraging the power of contests with the emerging video marketplace. ReacTV, the interactive TV channel launched by Florida real estate tycoon Frank Maggio, utilizes contests to draw eyeballs to and force consumers to interact with the channel's advertisers. ReacTV went live on cable and on broadband earlier this year and currently programs two hours of prime-time programming on cable TV in Tampa Bay and four hours of prime-time on the Web. It plans to announce it second major cable operator deal next week, and it currently is not charging advertisers who use the channel during its "beta" roll out.

While the business models vary slightly, the real growth of the burgeoning consumer video marketplace will rely on how much and how fast these networks can tap into their social communities. Says Peloso, "Our phase two plans are about a very broad and deep distribution network through social media, but we're not fully ready to paint the picture."

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