Kelsey Group Sees Online Video As Local Ad Paradigm

  • by May 25, 2007
Online video's popularity with consumers is driving the development of cost-effective video advertising options for local and small business advertisers, according to a new report from The Kelsey Group.

The report, titled "Online Video: A New Local Advertising Paradigm," says that the Internet allows small businesses that have not been able to afford TV spots to take advantage of the power of video for the first time. Kelsey points to production companies such as Spot Runner and TurnHere that produce and distribute video ads at price points significantly lower than those of traditional advertising.

The report reasons that local businesses--interested in leads, foot traffic or phone calls--may be better able to comprehend the value of video compared with more "abstract" forms of performance-based marketing like pay-per-click.

The report also cites the "vanity factor" that has already driven revenues for Internet Yellow Pages publishers, who it says also have the greatest opportunity in local online video ads. With Yellow Pages publishers' existing sales assets and small business relationships added to "high-margin, low ad elasticity vertical categories, such as professional services...the potential becomes clear."

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"Small-business video advertising can combine the traditional strengths of pull-based directional marketing, the Internet's targeting capabilities, and the emotional and dramatic power of television," Kelsey added. "Given the demographics of broadband users, the online audience reached by these ads would also be well-educated, affluent and more likely to engage in pull-based content retrieval."

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