Online Video: Why We Advertisers Have It All Wrong

Lessons From a Marketing Director by Day, YouTube Star by Night

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Kevin H. Nalty
Kevin H. Nalty
One typical romantic evening recently, my wife and I settled into bed to watch our favorite shows. She queued up a fresh recording of "American Idol" as I sat beside her, "Lost" episodes emanating from my warm Mac laptop.

For a brief moment, my inner marketing director became conscious of the irony. My wife was zipping through commercials with her TiVo remote while I begrudgingly watched ABC "house ads," a sad indicator of unfilled inventory.

A tear ran down my eye, reminiscent of "The Crying Indian" in the 1970s Keep America Beautiful PSA (later spoofed by E-Trade in a classic dot-bomb 2006 Super Bowl ad). To be fair, that tear might simply have been a symptom of seasonal allergies. But I think it was because the marketer in me feels like we have it all wrong.

Such is the sad state of advertising, where the DVR has bludgeoned television ads and we online-video viewers are content watching ads in lieu of paid content. Sure, video ad spending this year will run counter to overall economic developments, rising more than 30%. But consumer behavior changes far faster than advertiser behavior.

My marketing colleagues and friends from agencies report a similar reality: We're all on a mad rush to shift our precious marketing spending to higher-impact vehicles, desperately chasing consumers from print to television, and now to online video. Given online video's stunning audience growth -- 70% in a year -- why isn't it a more robust advertising platform?

The answer is simple: We marketers are still dipping our toes in the water, and holding online video to greater scrutiny than the rest of our marketing mix. We did the same thing with banner ads and paid search -- and it's not entirely our fault. It took years for the big bucks to move from radio to TV. It's Darwinian, really. I'd rather let my competitor be the first to sample lettuce and poison ivy, and I'll confidently consume what's left on the plate that didn't kill him.

As I often say, I'm not the smartest marketing director or the best online-video "star." But I am a rare human who manages a P&L by day and by night has more than 70 million views as "Nalts," one of online video's most-viewed comedians (and I use that term generously). I also participate with Hitviews, a NYC company that helps brands partner with top online "stars" for sponsored videos, product placement and other promotions. I've been tracking the rapidly changing online-video advertising space on my blog for three years, and I have a few tips for my fellow Ad Age readers.

Here are proven digital tips -- not from "Nalts" the comedian but from Kevin Nalty, a product director who has worked on the agency side, spent five years at Johnson & Johnson and now manages a P&L for a major brand. These tips are from the guy who scrutinizes the ROI on his marketing spend as if his life depended on it -- not the guy who crawls like a baby through airports so he can upload hidden-camera video of airport security reacting.

Tip 1: Adapt tactics by content tier
By now most brands have tried to participate in user-generated content. Maybe you've monitored blogs, made a branded video you hoped would go "viral" or run a few contests (by the way, the world doesn't need another video contest about why you like your mustard). But your leadership and their vigilant attorneys see it as reckless as going jogging down dark alleys in a "Dawn of the Dead" movie.

Here lies the chasm for marketers. We can exploit premium content via paid media. But UGC seems terrifying, and most marketers will either be selective or buy low-cost network ads, hoping they don't land in the wrong place. But here's a wonderfully kept secret about online video: There is no shortage of wildly popular amateurs with tremendous audiences. More people watch Nalts videos each day (about 150,000) than I can attract to a site in a month (at considerable expense). My online-video friends are fetching more views daily than any viral commercial on Ad Age's charts.

Tip 2: Expect video to boost awareness and intent
If you believe in such notions as "branding," you'll be quite pleased. The private studies I've seen show awareness and purchase intent rises significantly as a result of online-video views. And the cost per thousand impressions is quite affordable. Given the excess inventory, it's a buyer's market.

Tip 3: Find a good online-video media buyer. Look hard
I have a love-hate relationship with media buyers. They come in two flavors: First, there's the rare, strategic media person who understands your marketing objectives and executes and measures smart campaigns to support them. When I find this person, I cling to them for survival. Then there are the beautiful and articulate ones who really don't understand or care about marketing, but simply adore a nice lunch with the media sales reps. The latter scares me, but the former understands the differences between apples and oranges.

A comedic, sponsored video delivered by an online-video star to a loyal audience needs to be measured differently than a pre-roll ad that is suffered through silently. An in-video ad is different from a product placement. Branded entertainment is different from the commercials that "went viral." Online video forces media buyers to move from obsessing about gross rating points, awareness and CPMs to thinking about cost vs. performance of paid and "earned" media.

Tip 4: Don't search for an audience; find someone that has one
Hitviews CEO Walter Sabo likes to say that "every new medium creates its own stars." Milton Berle and Lucille Ball drove Americans to buy their first TVs. Julia Roberts packs the movie house. Nathan Lane sells out Broadway theaters. But, Sabo cautions, Lane has had more than one failed sitcom, and Roberts may not sell out a theater.

Similarly, the "stars" of online video are mostly new, yet have recurring audiences that rival many prime-time shows. Some are kids, most don't have acting training and almost all are "one-act shows." They write, act, shoot, edit, produce and market themselves. Is it sustainable? Who cares? Some are eager for opportunities to promote brands and know how to adapt a marketing message to their audience.

The challenge for a marketer, of course, is to let go of the message. I'd rather have 1 million people see my brand in a funny video than 10,000 see an awkward or forced promotion. The difference between your video and one made by a web star is that if we both upload the same exact video, a web star will have tens of thousands of views in hours. Yours will be lost in the sea of online videos. There's no "viral" firm that can solve this through clever distribution, and it can be far more expensive to pay for views (which aren't as valuable anyway).

Tip 5: Watch out for popular video 'stars' with no experience
Some webstars are savvy -- but many have stumbled into fame sans manager or experience working with brands. They might ignore inquiries, miss deadlines, groan over revisions and become as high maintenance as the star your PR firm so delicately handles.

Likewise, these "weblebrities" aren't just delivering a video but an audience of fans -- don't treat them like an outsourced video production firm. Vet stars carefully and have an efficient process for engaging them. And unless you have someone savvy to handle this, I'd outsource it. Kevin Nalty doesn't have the time or patience to deal with a Nalts.

Tip 6: Use the old 'one-two punch' of ads and sponsorships
Finding popular "stars" of the medium isn't the solution any more than the Coke cup in Simon's hand on "American Idol." As the online-video medium matures, we're seeing more sophisticated opportunities for product placement, sponsored content and media buying. A large CPG brand is going to want sponsored content's impact alongside online advertising's reach and frequency. The two work harder together than alone.

Tip 7: Measure the right stuff
When you're new to online-video marketing it can be as obvious as arriving to a nudist beach with no tan. You tend to either obsess solely on 1 million views or dive into nearly impossible performance indicators like sales per unique view. And we can target, but we can't yet find online-video stars or shows that appeal to precise segments like 35- to 40-year-old mothers with young children. But we can measure views, comments, ratings and even the small percent of clicks, and track awareness, intent and action before and after a view (or against a control). To me, that's more meaningful, but it takes some effort.

A lot of the exciting developments in the dynamic online-video space have not yet occurred -- so I'll keep postponing that book I've been promising to write for fellow marketers. But I hope this leaves you with a few ideas you can use. Online video offers an unsurpassed medium to deliver messages and gain instant feedback. We're still in the infancy of a new way to engage prospects and customers, and the bar is set so low. I look forward to greeting your next campaign with tears of joy (fade to black with soft music and my URL).

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Kevin H. Nalty is a marketing director for a Fortune 100 company, works with Hitviews, and by night is "Nalts" on YouTube. He covers online video on his blog, Will Video for Food.

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