Video e-mails make a blockbuster debut in Internet retail marketing.
By Andrea McKenna Findlay
Just a few months ago, retailers had come to realize the power of graphic-rich HTML-based e-mail marketing. Response rates were 2 to 3 times what they were for text-based e-mails. HTML e-mails were the hottest thing in marketing.
Today: old news.
The Internet economy may have slowed but fabled Internet time has not. Change still comes faster than anyone expects on the Internet. Today the newest marketing approach is video e-mails. Just as their name implies, they are e-mails that contain video clips, either film or animation. Some even go so far as to mention in the audio portion of the video the name of the person to whom the e-mail is addressed.
Because they are relatively low-priced and some users have experienced click-through rates that are twice as high as HTML e-mails, video e-mail is likely to become popular fast, advocates say. “Major advertisers love video mails already so they are here to stay," says Paul Soltoff, CEO of St. Petersburg, Fla.-based DirectNet Advertising.net, which is planning to launch a video email product and sniffer technology by the fourth quarter. "But both html and video email will be used even five years from now because video emails require more production and a bigger budget to make." Html emails are faster to produce and can be less expensive as well, he adds. In fact this technique is so new that retailers who have used it successfully are declining to talk about it for fear of giving up a competitive advantage. "Retailers are especially secretive about new technology that dramatically effects their advertising," says Blair Lyon, founder and president of TMX Interactive.
The idea holds so much promise that already a number of vendors have come into the market. Competitors include Storymail Inc., MindArrow Systems Inc., TMX Interactive, Dynamics Direct Inc. and Vendaria Inc., a platform that is sold through such resellers as iEntry Inc. and Bigfoot Interactive. All have different approaches to providing video e-mail. Some embed the video in the e-mail message, reasoning that that approach divorces the ability to view the e-mail from the speed of the viewer’s Internet connection. Others use streaming video, which requires a live Internet modem connection to download video on the spot. Those providers use sniffer technology to determine which connection recipients require to view the message. Proponents of streaming technology say they can better tailor messages by delivering a streaming video that all recipients can view based on what the sniffer technology determines their connection to be.
MindArrow Systems, based in Alisa Viejo, Calif., provides a self-service or managed video e-mail marketing product that it claims produces an average click-through rate of 13.5%. That compares to 1.5% for regular direct mail, 3.8% for rich media banner ads, and 5.4% for opt-in e-mails. “Video e-mail is compelling because it’s like TV,” says Scott Altman, director of marketing. “Consumers today are used to seeing ads in a multimedia format. When marketers move to rich media they are able to communicate information in a format that is more engaging and compelling to a consumer. And that makes for better results.”
Click-throughs
For Drexel Heritage Furniture Inc., which offered 10% off coupons through MindArrow Messenger video e-mails, 24% of recipients opened and viewed the e-mail. Typical open rates for e-mail are below 10%. MindArrow says 85% of those who viewed the message clicked through to the hyperlinks for the store. Within the first week, the retailer said coupons showed up in showrooms around the country. “Drexel said using the video messages gave them an opportunity to increase brand awareness and drive customers to the web site,” Altman says. In another example, Quicksilver, a surfing and outdoor clothing line, used video messages to promote sponsorship of a surfing contest. The e-mails, which Quicksilver sent to 21,500 people, had 20% viewership and 61% of those clicked through to at least one hyperlink in the message, says Altman.
MindArrow Messenger costs $2,500 to $5,000 if a marketer has existing material, such as a commercial, that needs to be translated into a video e-mail. Costs can exceed $10,000 if MindArrow is involved in creative development as well as delivery, says Altman. “Our experience is that the return on investment will exceed the ROI marketers would get on direct mail or other types of e-mail,” he says. “The cost is higher but the response rates also are greater than the additional costs.”
A 50-50 test
West Hill, Calif.-based Dynamics Direct launched its video e-mail solution in August 2000 and works with such clients as The Disney Store.com, eTrade Securities Inc. and American Express Co. Inc. “It’s a complex process to successfully deliver rich media content to the full array of consumers,” says Russ Gillam, president.
One differentiator between Dynamics Direct and other players is its patented technology that personalizes e-mail messages. For example, the service can use database information to address a recipient by name in the video message. The system also can suggest products to the recipient based on the purchasing profile of the individual.
Dynamics Direct says its service is suited best for larger clients who send a high volume of e-mails. The service costs between $10,000 and $20,000, including creative and delivery, which breaks down to about 2 to 4 cents an e-mail. Gillam says most clients send about 2 million e-mails per month. He says the value generated is typically 200% to 400% over HTML or text e-mail. “We’re getting really strong responses that surpass the costs,” he says. Response rates range from 5% to 25%, says Gillam.
Vendaria, a Seattle-based company that provides video e-mail software through such resellers as Lexington, Ky.-based iEntry and New York-based Bigfoot Interactive, tested its theory of higher response rates earlier this year with an undisclosed client. The company’s Envision Video Mail platform increased click-through rates nearly 28% compared to a control group that received an HTML message. The test included 200,000 recipients, 100,000 of whom got video e-mail and 100,000 of whom did not, says Scott Ferris, president and CEO. IEntry, which has delivered more than 10,000 ads within its e-mail newsletters over the past year, projects that at least 20% of its clients will use the video e-mail technology by next year, says Rich Ord, CEO.
Rates 20x higher
Philadephia-based TMX Interactive, a three-year veteran of the e-mail technology market, has upwards of 60 clients, including Liz Claiborne Inc. and Estee Lauder Companies Inc. Response rates for video are between 15% and 30%, compared to 7% on HTML messages and 3% to 4% on text messages, TMX says. TMX says its service costs only about 3 to 7 cents per e-mail. “It’s a little more expensive than HTML or text but the response rates are worth it,” says Lyon.
Storymail, which was founded in March 2000, says it has about six pilots lined up. So far it has run a campaign with Mars Inc. and NASCAR, which sent video e-mails to 7,500 consumers. The click-through rate was upwards of 15%, which officials say is about three times that of other e-mail results.
Storymail aims to license its technology to companies who send a large volume of e-mails. Pricing starts at $35,000. Eric Sternberg, vice president of marketing, points out that this technology costs about a quarter of the cost of streaming video technologies that require high bandwidth applications.
While vendors claim that video is a better way to engage consumers in a marketing message, the most crucial part of video e-mail is delivering the message to the consumers in a format they can read. But there are different approaches to the technology. And because video e-mail is new no technology has emerged as a leader. The ongoing argument is whether messages should be embedded into the e-mail or delivered by streaming video through an Internet connection.
Los Gatos, Calif.-based Storymail uses the video embedding technique to deliver its messages. “The quality is guaranteed because it doesn’t play until all the content is fully loaded and is not broken up with bandwidth downloads,” says Timo Allison, director of market development. However, it is possible that it could take too long for a recipient to download a message, a factor that can make marketing efforts useless. But Allison says that while there is a risk of losing the customer the technology gets around the obstacle by using software that can identify what a recipient can download. The software, called Storymail Teller, pops up when a recipient gets his or her first message from Storymail. The recipient has to download the program. Sternberg says that two-thirds of the people who are given the downloading option choose to install the Teller software.
Storymail officials say they built the company to address limitations in e-mail technology—mainly that not many people are on high-bandwidth connections and can access rich video graphics. Storymail chose to cater to the lowest common denominator by developing its embedded video and Teller software that adjusts the video content to lower bandwidth users. “We’re able to address and reach all e-mail software devices out there,” Allison says. Vendaria also embeds the video.
Cleaning up the lists
Other video e-mail vendors, such as TMX Interactive and MindArrow, deliver video e-mail through a recipient’s Internet connection as the recipient is viewing the e-mail. The companies use sniffer technology to identify what type of connection a recipient has and then delivers the appropriate version of the message. The concern with this approach is that recipients with slow modem speeds will not view the message or not view the same message as others with faster modems. “Once we see what the end user needs we serve them a scaled down version of the message and that’s the most important thing that the marketer wants,” says Lyon.
Lyon adds that some clients who want to send e-mails to their own lists often find that the list does not contain the types of customers it expected. He says sniffer technology can help retailers identify facts about customer lists such as modem speed, location and type of customer. “We can tell the client how good their lists are and help them fine tune them,” he says.
Even though video e-mail marketing is coming on fast now, it wasn’t fast enough for some pioneers. Radical Communications, which launched in March 1999 with the first such video e-mail application, shut down operations in June because it was running out of money, although it numbered among its clients such well known brands as Express.com, Lee Jeans and Old Navy.
But with the concept of Internet time intact, it’s probably only a matter of months before some great new twist changes the video e-mail market.
andrea@verticalwebmedia.com
