It's no wonder YouTube drew the attention of powerful suitors like Microsoft, Google, and Yahoo when it came up for sale. When branded commercials such as those for Sony's Bravia TV line or Smirnoff's Tea Partay appear on YouTube as free video content, they draw millions of people who watch them voluntarily. Ironically, it's those same millions who are zapping TV commercials with TiVo, tuning out millions of dollars worth of advertising.
Clearly the ad paradigm has shifted. Social media has helped put the consumer in control, and online video is now front and center at the conference tables of every marketer and agency.
"Social media and online video will reshape the rest of this decade," says Mark Kingdon, CEO of Organic. "But we're still in the very early stages of brands figuring out how best to get consumer engagement. Banners don't get the same response in social media as they do in other places, because people are in the network to connect with other people. In social media, you can't use interruptive advertising to get attention," Kingdon explains. "So advertisers have had to figure out new engagement models where they give something to get attention in return, and I think that's what we're going to see going forward."
Fortune 500 advertisers are jumping into online video with both feet. "Movie studios, automotive, consumer packaged goods, high-tech, and the service space," lists Adam Gerber, vice president of ad products and strategy for Brightcove, a provider of online video publishing solutions. "Advertisers from Apple to IBM to Pfizer and P&G, as well as a variety of financial companies and most of the movie studios, have started to make significant commitments over the past year or two to experimental and test efforts in the online video space," Gerber says.
While online video appears here to stay, simply shifting TV content online is a fad that won't last. "Just to see tons of videos that couldn't make it in the 500-channel TV universe is not going to be enough to bring value to the consumer or the brands," says Tony Quin, CEO of IQ Interactive.
"Advertisers and marketer shave to understand that the broadband video environment is not television," Gerber says. "They need to recognize that there has to be a wholesale change in how they build messaging strategies and do advertising to take advantage of the environment strategically. It's not about the 30-second spot. It's about understanding how to create lots of different messages efficiently over time to small segments of the viewing audience."
"We're starting to move into a model that is closer to a 3-D game," Quin observes. "Imagine being able to walk into a virtual Wal-Mart store and pick up any one of 20,000 products and turn it around in your hand. But I don't know which product you're going to pick up. The technology simply creates the image as you're picking it up, in real time. The key is to allow people to participate in the experience and make it their own."
"You're not in the advertising game anymore. You're in the content game and the future of online video is also the future of offline video," says Joe Jaffe, president and chief interrupter of Crayon, a new marketing consultancy, and author of Life After the 30-Second Spot.
"It's really the future of video. It's going to be come increasingly less important whether it's on- or offline, because those tools are coming together very quickly."
Organic's Kingdon adds: "It doesn't mean the banner is dead. But advertisers are going to be working a lot harder to get true consumer engagement in social media. And that's going to start to have a bleed-over effect into other online media."
Increased WiFi availability and hard drive space will be huge tipping points for the growth of online video going forward, Jaffe predicts.