Video Chat Is Where It's at -- but How Do Brands Fit in?

As Non-business Use of Service Grows, Citibank, Ford, Verizon Buy OoVoo

By Published on . 5

YORK, Pa. (AdAge.com) -- When Jackie Huba and David Armano got into a heated Twitter debate about Skittles' social-media home page switch last year -- she called it a "stunt," he said it was "remarkable" -- she invited him onto OoVoo to hash it out.

11 MILLION USERS: OoVoo's consumer base is comprised of teens, young adults, over-65s, and professionals.
11 MILLION USERS: OoVoo's consumer base is comprised of teens, young adults, over-65s, and professionals.
The video chat lasted 12 minutes. That's far longer than any 140-character tete-e-tete would likely sustain, and it was more revealing, offering debaters facial expressions and real-time conversation.

But it's not just Ms. Huba, author of "Citizen Marketing: When People Are the Message," fueling OoVoo. A growing number of consumers are using video chat in conjunction with social networking to keep in touch with family and friends to hold video conferences.

Dwarfed by Skype
OoVoo's 11 million users, half in North America, are made up of several key groups: teens and young adults; 65-plus users connecting with family; and young and middle-age professionals using it for both business and personal video chats. Of course, OoVoo is dwarfed by competitor Skype, with more than 520 million worldwide users, about 20% of those in the U.S. Other internet giants such as Google and Yahoo also have video-chat services, along with other standalones such as PalTalk and TokBox.

A Cisco research report last summer estimated that although video calling and video instant messaging are still a "small fraction of the overall internet traffic," video communications will increase tenfold from 2008-2013.

All that activity has some forward-looking marketers and ad agencies exploring how they can use video chat for advertising directly to customers, market research, customer service and even branded interactive experiences.

"Today people don't trust companies. One of the things marketers want to do is to humanize their brand. What better way to do it than put a live person in front of them?" Ms. Huba said. She pointed out that some research shows video is the most trusted medium by consumers and wondered, "Why aren't they using video more? ... Why not get the brand manager on talking about your new product? Or what about customer service?"

Rachel Geltman, founder of Video Chat Network, is a former ad-agency researcher and account planner who now works with agencies and marketers using video chat for market research. She saw her 13-year-old daughter using video chat on a vacation out West, talking with her friends back East, and decided she had toapply it to market research.

Market research over chat
Ms. Geltman, who uses OoVoo, which allows recording as well as up to six people on camera at one time, believes people are more comfortable and honest, as well as more accessible, in video-chat market research. Time-crunched professionals, a desirable demographic for marketers, are more likely to video chat than drive to a focus-group location, for instance, and she can combine people from across the country into one group.

"You get a great ethnographic snapshot of each person in their own house," she said. "If I'm talking to women in their kitchens, they'll do things like walk over and get products or appliances to show me. ... You are moving into their turf, so you get a little snapshot of what it really is."

That's also the idea behind video-based focus-group alternative QualVu, which has conducted far-flung research for Procter & Gamble, Unilever, Kraft, Microsoft and Kimberly-Clark.

OoVoo makes money in subscriptions for its tiered level of services from people like Ms. Geltman, but also makes another 33% to 40% of its revenue in advertising fees. (The free version of OoVoo includes advertising.)

OoVoo CEO Philippe Schwartz said if it adds in revenue from search while people are chatting in OoVoo, its revenue jumps from 60% to 65%. About 90% of OoVoo's ads are served by networks, but about 10% are marketers served directly. OoVoo is privately held and declined to reveal its revenue.

Chat CPMs
But it charges anywhere from a few dollars for the cost of a thousand impressions for general advertising up to a $20 to $25 for more targeted efforts, Mr. Schwartz said. Some marketers that have used OoVoo directly include Fuze online collaboration software and JumpTV, while brands that come through ad network serving include Citibank, Ford and Verizon with "very good" performance, according to OoVoo.

And while some advertisers may opt to stay away from some anonymous video sites, such as ChatRoulette, that might have adult-only content, that's not an issue for OoVoo, because its privacy options let users only connect with people they've approved. (Skype and other video-chat players have similar features.)

IDC analyst Rebecca Swensen did offer a caution to video-chat advertising: "A lot of companies in this space are trying to push advertising-based revenue. But when it comes to consumers, what I've seen in the video space is the advertising needs to be as unobtrusive as possible; otherwise, people get ticked off."

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