The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
Thanks to online video, a brand’s newest advertisers may be its customers.
Pet enthusiasts are just as eager to share pictures of their furry and four-footed friends as other people are to show photos of their kids. Retailer Petco.com knows this. It also knows that video often can be more compelling than still shots. So it made consumer-generated videos the basis of one of its latest marketing campaigns.
On July 14 customers at 100 of Petco’s nearly 900 stores strutted their pets’ stuff in the Petco Stars talent contest. The winners in each store were asked to upload to Petco’s web site a one-minute video of their dog or cat performing the winning pet trick. After Petco judges narrowed the field to 12 finalists, site visitors were asked to vote on their favorite video to pick the contest winner, who will receive a trip for two to Los Angeles and a role for the pet in an upcoming Petco advertising campaign.
The contest is using the free upload services on YouTube.com. Anyone-including marketers-can upload videos and gather votes on YouTube for free. YouTube advertisers also have another option when running branded contests: access to extra tools and functionality-such as design help and ads placed throughout YouTube to drive tubers to their content.
It’s not the first time Petco has experimented with mixing user-generated video and marketing. In April it added a new video option to its on-site customer review functionality from vendor Bazaarvoice Inc. Consumers not only can write about how their dog loves his new chew toy-or not-but also can upload video of Rover playing to his heart’s content. Bazaarvoice screens the videos and places them on Petco.com.
A bigger payoff
In an Internet world where marketers have become accustomed to a precise measurement of ROI in traffic, clicks and sales, John Lazarchic, Petco vice president of e-commerce, sees a bigger payoff in using consumer-generated video.
“At the end of the day we always want sales. And with the video reviews, if they are done well, I think we will see an uptick on the products that have that type of review,” Lazarchic says. “With the written reviews, we’ve been able to tie it back to ROI. But I think the return with video will be more on engagement with the web site, site stickiness, and people’s tendency to come back to Petco as a source of information than necessarily a direct purchase as a result of this technology.”
The idea of spending on any online marketing tactics focused on customers’ engagement with a brand or product instead of directly on the fastest route to sales was shoved aside by many online marketers in the early struggle on the web for survival. But the approach is returning as more e-retailers find profitability and consider the future. Traditional search marketing, affiliate marketing and comparison shopping engines may be great at connecting consumers with products they’re looking for, but they don’t do much to fan the flames of a consumer’s feelings of emotional connection to a product or brand.
“With more sites profitable, it’s now about building a loyal customer base against your competition,” Lazarchic says, “especially in a category like pets where you have several competitors selling the same product. The reality is if a customer does a search for a pet product, you and your competitor are both right there. So if a customer has to make a decision between the two on something besides price, what else can I use?”
Letting customers interact with a brand or product in new ways is one answer, and that’s driving marketers’ growing experimentation with consumer-generated content from reviews to blogs to community forums to photo-sharing.
“The notion of consumer engagement and consumer participation will be an element of a good majority of campaigns launched by marketers in the next two to three years,” says Reggie Bradford, CEO of ViTrue, a consumer-generated advertising platform that hosts and runs consumer-generated video contests for brand marketers.
The concept of letting your consumers do your advertising isn’t new. “The Pillsbury Bake-off was essentially user-generated content in an offline venue,” says Matt Kates, vice president of strategy at interactive promotions agency ePrize. “Video is just moving forward from that. It’s really taken off in the last year or two.” To that point, ePrize, which did its first online promotion using consumer-generated video only last year, has now completed a total of three video campaigns with six more in the works.
Generally, consumer-generated video promotions take the form of a contest. For brand marketer Pringles, for instance, ViTrue recently completed a campaign, “Jingles for Pringles,” in which consumers uploaded self-produced musical odes to the snack chip for a chance to win a trip to the finals of TV’s “American Idol.”
The huge popularity of YouTube is a major factor and a key driver in marketers’ experimentation with consumer-generated video. Traffic to YouTube has soared in the past year, with the number of unique U.S. visitors rising from 13.4 million in June 2006 to 43 million two months ago, an increase of 222%, according to comScore Networks.
Without YouTube, industry observers say, there would be few consumer-generated video promotions. YouTube helped make online video popular and helped consumers understand that uploading video to the Internet is easy to do. Were that not the case, any online consumer-generated video promotion would not only have to educate users on a featured product, but also on how to upload a video, creating a higher hurdle to consumer participation.
That said, however, from a marketing perspective, the use of consumer-generated video still is in the testing stage. That’s one reason many-though not all-such promotions to date have come from brand advertisers large enough to have big advertising budgets, including funds dedicated to testing.
“Companies like Coca-Cola, where it’s really about the consumer experience, are feeling they are not getting as much out of television,” says Emily Riley, advertising analyst at JupiterResearch LLC. “They are used to spending larger budgets for testing; it’s the comfort zone they have. If you are pretty much any other type of advertiser, you are sticking to a smaller-budget test version.”