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Marketing is currently undergoing fundamental changes … and the reasons for that are plentiful: On the one side, the Internet has firmly established itself as a widespread channel for communication and customer interaction. Simultaneously, particularly among young people, the increase in Internet use is accompanied by a decrease in the use of traditional media, such as TV. These younger users were “born digital” in the truest sense of the word. In most industrialized countries, the percentage of their time that young people spend on the Internet has already almost reached 50%. On the other side, the interaction between advertisers and customers in cyberspace is changing dramatically – a real paradigm change is underway: The “Collaborative” Web 2.0 is perceived to be credible and authentic. Moreover, passive users are becoming active creators and their own “head of programming”: On the new “collaborative” Web, users freely praise and criticize products and companies, and consumers now already produce more product and marketing information than companies themselves. The realization is that user-generated content is usually considered to be more credible than the marketing messages put out by advertisers – a concept that is both surprising and discouraging from a marketing perspective. From the companies’ point of view, intelligent use of the Internet requires the offer of a dialog with the consumer – both individuals and entire communities – that is authentic and entertaining. This leaves brand management facing a host of new challenges in the digital age.

However, the consumer trend towards “consumer-generated content and advertising” also means that brands may be presented in a context that is not in line with the desired strategy and positioning. In his marketing blog, Cultureby.com (www.Cultureby.com), the anthropologist Grant McCracken writes about the learning process that a brand must undergo. He states that “these kinds of open discourses are essential if a brand is to be kept vital and experienceable”. This inevitably leads to the democratization of brands: With Web 2.0, the Internet user is free to respond to the brand’s message, with responses that may be so creative that the form alone carries the message. In this case, the communicative strength is based less on extensive media budgets and strategies, and much more on networks, multipliers, and communities.

Parallel to the rapid growth in the overall Internet usage, more than 50% of all Internet users watch videos (for example, on video portals or media libraries), and watch either live or time-shifted television shows on the Internet. Since 2005, the number of users of Internet videos has doubled, and that trend continues to grow. The number of users watching video on the Internet is expected to reach just below one quarter of all Internet users across all industrialized countries. Studies carried out substantiate the overriding significance of online video commercials: It found that if different members of given target group are addressed using different media and advertising materials, those who had contact with online advertising videos displayed considerably higher advertisement recall than those who had contact with traditional (static) online or TV advertising. Online video leads to higher awareness of the advertisement (measured by advertisement recall), higher awareness of the brand, and higher rates of positive product estimation and associated willingness to buy. According to forecasts by Jupiter Research, investment in online video will increase by an average of 27% a year until 2011 as a consequence.

With this in mind, SAP and e+p Commercial Filmproduction conducted an analysis of video commercials shown online by advertisers around the globe. The goal of this study was to filter out success factors and trends for using online video commercials and identify global best practices. To this end, all available analyses of developments and trends in the area of video communication were evaluated; success factors established and then further refined; and the results finally compared with almost 300 creative advertisements that are known to be successful. The analysis of secondary material was substantiated in a series of over 30 interviews with chief marketing officers, agencies, and advertisers.

The overwhelming result of this study: The increased usage of video communication on the Web will not only lead to further differentiation of the online film formats used, but also accelerate the move into a new phase of marketing, following some basic principles for action:

(1) Interdisciplinarity increasingly required: For advertisers and agencies alike, the efficient use of the full potential of Web 2.0 primarily requires a high level of interdisciplinarity across campaigns and projects. Functional boundaries and silos between traditional marketing, dialog marketing, and a separate online marketing area are increasingly proving to be counterproductive. The goal must be to orchestrate teamwork both horizontally (advertiser – agency – production) and vertically (traditional marketing – dialog marketing – online marketing) using interdisciplinary projects.

(2) A fundamental change in structure – easier said than done: It is to be expected that dissolving existing departmental silos will lead to resistance on many different levels. In most organizations, it is essential to instigate sustainable change management when carrying out wide-reaching changes – for example, modified allocation of responsibilities, organizational structures, and profit center structures, all the way down to the need to negotiate individual employment contracts and bonus structures.

(3) A communicative key concept, but with channel-specific realization: All content and measures must be implemented on a target-group-specific and channel-specific basis and with 360-degree communication. At the same time, key concepts need to be continued across various communication channels and interaction points and implemented in a way that is media-specific and exciting. The focus here is on the doctrine of the “want-to-see-again” factor and the desire for diverse methods of dialog between customer and advertiser. The Internet makes the traditional approach of simply broadcasting content across different channels largely obsolete; in its place, a “solution-oriented” approach is increasingly becoming necessary to communicate relevant content using a cross-media approach to address specific target groups. Experience from different companies shows that having a “campaign manager” or “centers of expertise” which orchestrate all measures and disciplines is likely to lead to success.

(4) Creativity and innovation go hand-in-hand with content: While not absolutely necessary, creativity and the willingness to innovate significantly increase the chances of being successful. Original, innovative campaigns and videos achieve higher recall among consumers and usually pay off financially, for example, in terms of increased market share for the products advertised. Depending on the specifics, creativity and innovation can strengthen brand values (both in the mid-term and long-term) and increase short-term sales. The more the customer feels connected with the product or the more important a given product is to them (and therefore the higher their fundamental involvement is), the more emotional and creative the advertisement should be. High-involvement products are usually characterized by a long life, high identification potential, and a high sale price – for example, cars, jewelry, watches, or expensive consumer electronics. Consumers have only a limited emotional relationship with short-life consumer goods such as laundry detergent, which means that the involvement factor for these products is extremely low. Here, the focus is on the content – that is, the product benefits. Campaigns for short-life consumer goods tend to require content that is both coherent and highly product-oriented; these campaigns usually succeed by conveying clear messages, not by being original. This leads to the image gaining significance and the depth of the relationship with the customer becoming decisive. Brand loyalty and customer retention, trust, and credibility are cited as the most important goals of media. In addition, the well-known product-development practice of involving customers in the development process at an early stage (for example, through Web-based Electronic Product Clinics) in order to comprehensively test products before they are launched on the market is also increasingly being used e.g. for online video commercials. Before these advertisements are broadcast through traditional media, they are first tested online at almost zero cost; they are only then released for broadcast on television and in movie theaters if positive feedback is received. In extreme cases, parts of the campaign development process are outsourced to customers and traditional focus groups supplemented with broad-scale online testing.

(5) Detailed planning, measurability, and success control – if only on a limited scale: This places high demands on marketing planning: In place of fixed annual planning, the systematic use of online video communication requires planning that differentiates between content while allowing a lot of freedom for revision of set content, goals, measurement indicators, and budgets during the year, known as marketing mix optimization. The priority should be rigorous monitoring of user behavior and the chosen measurement indicators.

(6) Seeding – systematic advertisement placement: In this context, the term “seeding” refers to the strategic placement of online video commercials on highly frequented – and above all, credible – online platforms with the largest possible distribution potential. These include, for example, topic-specific portals, forums, and communities as well as egocentric networks such as blogs that are visited by innovators and multiplicators. If online video commercials (or viral messages) are placed in these online hubs, they can quickly spread on an epidemic scope and soon reach critical distribution mass. Simply placing online video commercials (“passive” placement) on the “broadcast yourself” platforms such as YouTube, Clipfish, and MyVideo risks the content being lost among the hundreds of thousands of new uploads every day. Seeding can take place in two steps, as in the case of Volkswagen: The first step involves systematically addressing multiplicators, opinion leaders, and prominent bloggers for certain subject areas. Once the online video commercial has reached a certain level of initial market momentum, it is placed more broadly on platforms and subject-specific video portal channels. Measurement is conducted using online tracking, and the customer pays on a guaranteed cost-per-view basis only.

For more details, refer to the article “Online Gets Going with Moving Images” … this will be published in the next coming days and linked to this blog.

This blogs series “Marketing 2.0” addresses topics that have come into the forefront of importance for marketing and must be tackled immediately… stay tuned for the next blog!

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