Move over, TV

In his first interview on “Amazon Fishbowl with Bill Maher,” the live video program that premiered on Amazon.com in January, political humorist Maher quips to author Stephen King about the massive change underway in entertainment media while recalling a past interview from another realm. “A couple of months ago on my other show, on television,” he starts out, then interjects with a dismissive laugh echoed by King: “Television, so 20th Century.”

The studio audience of 300 people also joins in the laughter. And you can see and hear it all on Amazon.com, where the premiere Fishbowl show is still available in an online video file.

Repackaged, retargeted

Television and video programming aren’t going away any time soon, of course, and video on the web is not a new thing for retailers, who have been offering early versions of it for years. But now TV and video programming are being repackaged, redistributed and retargeted at consumers via the web like never before. Online retailers like Amazon.com Inc., J.C. Penney Co. Inc., Nordstrom Inc. and Wal-Mart Stores Inc. have emerged under this new light as more than just retailers, but also as developers and distributors of customer-engaging entertainment that opens up new ways of selling merchandise.

“This has the potential to generate a whole new approach to online retailing, in books, music as well as other products,” says Todd Shanko, an analyst who specializes in TV, film and digital products industries for Jupiter Research. Analysts note that the success of such online media is due in part to the spread of broadband Internet access into homes. A stunning 68% of all households with Internet access connect via broadband, Nielsen/NetRatings reported in March.

Not surprisingly, Amazon is taking the lead in innovation as the first to run live programming produced exclusively for a retail web site. “Amazon is once again raising the bar for everybody by teaching consumers to do things differently,” says Amy Klaris, a New York-based retail strategist at consultants Kurt Salmon Associates. “Amazon taught people how to buy online and had a good experience that benefited all retailers. Now they’re teaching consumers they can elect to watch something rather than wait for something to be advertised to them.”

And, she adds, consumers now have the instant ability to purchase what’s featured in the video programming they’re watching. As Maher interviews King, for example, just below the online video clip are promotional content and hot links enticing viewers to buy the main topic of the interview, King’s novel “Cell,” as well as other works by King and other authors.

While it’s too soon to know if adding entertainment to a retail web site actually drives sales, industry expectations are high. “Whatever a retailer’s niche, this entertainment-generated traffic will be very valuable,” says Mary Brett Whitfield, analyst and senior vice president at consultants Retail Forward Inc., Columbus, Ohio. “Retailers should be able to drive higher conversion rates by commanding their attention with entertainment at the point of purchase—a strategy the web makes possible by the ability to show a video and a buy button on the same web page.”

Looking for compelling

Other leading retailers, meanwhile, are making major inroads as entertainment-producers in their own right. “If the entertainment medium makes you compelling as a place to shop, it differentiates you from the competition,” Whitfield says.

Wal-Mart’s Walmart.com is setting up musicians in music video recording studios around the country to produce unique music videos that can be purchased only through Walmart.com’s Soundcheck service or on CDs in Wal-Mart stores. “This is expanding our relationships with customers, because music is an important part of their lives,” says Cameron Janes, senior music business manager at Walmart.com. “We’re bringing compelling content to them and enhancing their ability to discover new music.”

J.C. Penney, in its multi-media and multi-channel sponsorship of this year’s Academy Awards, ran its Oscar-night TV commercials on its retail web site, JCP.com, and on special Oscar sites offered by AOL and Yahoo. The online versions of the TV spots are identical to those shown on TV—fun-filled, rock-music-enhanced displays of how women and men in J.C. Penney’s exclusive apparel designs turn heads and set off car alarms—but with the added feature of letting viewers click the video to instantly purchase online the items worn by the commercial’s model-actors.

Retailing as entertainment, while offering new ways to engage consumers, is also providing new ways for retailers and suppliers to collaborate, creating new forms of cooperative marketing as well as new revenue streams for retailers.

“This is all part of Amazon’s ongoing effort to help customers discover new films, new music and new books, and help the creators of those works to find new audiences,” an Amazon spokesman says.

Discovery

Likewise, the Soundcheck service enhances Wal-Mart’s relationship with its music label partners as well as individual artists, Janes says. “We’re constantly looking for new ways to give recording artists new visibility in the market and helping our music label partners offer something unique,” he says. “Music labels have been coming to us asking for more opportunities to expose their artists.”

Moreover, both Wal-Mart and Amazon are incorporating paid sponsorships into their online entertainment. “Retailers are thinking of themselves as more than just retailers,” Whitfield says. “They’re looking to see if they can leverage the traffic to their web sites by selling advertising.”

Wal-Mart, while creating a new advertising venue in Soundcheck, has enlisted Proctor & Gamble Co.’s Gillette brand to sponsor both its online music videos and complementary in-store promotions. “We’re extremely pleased to be working with Gillette on this exciting new music performance series,” a Walmart.com spokeswoman says.

The Amazon Fishbowl series includes video commercials by sponsor UPS. And, expanding the sponsorship into the homes of Amazon customers in a “reality” form of entertainment, UPS and Amazon are cooperating on a deal that shows video clips of celebrities joining UPS drivers to personally deliver orders. A preview of the Fishbowl program—at Amazon.com/entertainment—shows a clip of comedian/writer/director Paul Reiser arriving in a UPS truck to deliver a copy of the DVD of his movie, “The Thing About My Folks,” to a customer who had ordered it through Amazon.com.

The combination of web and TV/video programming is also reaching into stores, where Wal-Mart runs its unique Soundcheck content, based on in-house and Macromedia Flash technology, on its in-store TV network as well as on big-screen high-definition televisions in its consumer electronics departments.

The right time for engagement

The multi-channel strategy is all about engaging shoppers at the point they’re mostly likely to make a purchase, whether online or in a store—a capability not possible in traditional forms of entertainment-based advertising, experts say.

But while the transition from retailing into a hybrid form of retailing and entertainment is presenting retailers new opportunities as they explore ways to capitalize on the convergence of web and media technologies, it’s also raising questions and presenting new risks: Are retailers media moguls or entertainment providers or merchants? Will they alienate customers if their attempts at mixing retailing and entertainment results in a clumsy or overly promoted shopping experience? “While developing new revenue streams, it gets into a fuzzy space regarding what business a retailer is in—is it a retailer or a media company,” says Jim Okamura, Chicago-based senior partner with retail consultants J.C. Williams Group.

Profit or not?

Some retailers, he adds, have been considering whether media properties, including in-store TV networks as well as online video programs, should develop into profit centers based on advertising revenue, or maintain a lower profile as a means of channeling trade promotion funds from suppliers, or operate independently of advertisers. The wrong decision, Okamura says, could lead to an overdose of in-your-face marketing. “It could turn customers off, and those are the things that keep marketers awake at night,” he says. “They’ll ask, ‘Have we overdone it?’ Time will tell.”

Retailers so far are being cautious about revealing early results of their dive into the realm of Hollywood, saying only that early feedback from customers is as good as or better than expected. A spokesman for Amazon declines to elaborate other than to say that pilot showings of the Amazon Fishbowl with Bill Maher program brought in unsolicited, complimentary e-mails from Amazon.com shoppers. “Our customers are very involved in our web site and the Fishbowl feedback has been very positive,” he says.

While skimping on the details, however, the new breed of entertainment-focused retailers is sending out the collective message: “Stay tuned for more.” Amazon’s Fishbowl program—which launched as a pilot during January’s Sundance Film Festival in Park City, Utah, offering a glimpse at what will run each Thursday evening for 12 weeks this summer—will present content, including interviews and musical performances, related only to the category of books, music and movies. But Amazon is planning on additional series related to different retailing categories. “The common theme is that they’ll be innovative, interactive ways for our customers to discover new products,” the spokesman says.

J.C. Penney, whose Academy Awards marketing campaign was its largest-ever promotional event—it coincided with a temporary store in New York’s Times Square stocked with designer merchandise that could be purchased only on web-based kiosks (See Kiosk story, p. 40)—says the campaign was a harbinger of things to come in the hybrid world of mixing the Internet retailing and TV/video programming. “It’s new ground for us to have that level of integration between TV ads and online retailing,” a spokesman says. “It seems to be a natural process to integrate what’s shown on TV with what’s available on our web site. To go instantaneously from one to the other, that’s pretty exciting.”

Adds Walmart.com’s Janes, “Soundcheck fits well into what we’re trying to do as a company overall. When we show Soundcheck music videos on our high definition TVs in our stores, it’s a great opportunity to showcase those TVs.”

Well developed technology

Industry analysts and technology experts agree that the technology behind this new form of entertainment retailing is solid and already capable of more sophisticated eye-catching and purse-opening ways of engaging online shoppers. Moreover, the market forces behind retailing, TV/video programming and advertising are pushing the three industries closer together. Indeed, online presentations of interactive mixtures of merchandising and entertainment may quickly become a new competitive standard for online merchants, experts say.

“Retailers and manufacturers know that a lot of buying decisions are made in the store or online, not when consumers are sitting in front of a TV watching a commercial,” Whitfield says, adding, “Wal-Mart is becoming one of the most watched TV networks.” Mixing TV/video programming with the web also caters to the impulse buy and the introduction of brands and products when shoppers’ interest in making a purchase is at a peak, she adds.

Also supporting the ongoing development of online entertainment as retailing is the ability for retailers to proceed at their own pace and with their own strategies. Nordstrom, for instance, is taking a more subtle approach to mixing video programming and online retailing, but one that’s nonetheless creating a marketing splash, Whitfield says.

The designer speaks

In its Nordstrom Silverscreen, which offers unique re-creations of pop music videos on a web site of the same name, Nordstrom engages customers with interviews with designers of fashion apparel sold on Nordstrom.com. “I’ll Tumble For Ya,” a 1980s music video showing singing and dancing teenagers and originally produced by The Culture Club, is shown on NordstromSilverscreen.com in a revised version accompanied by a “Behind the Scenes” video that explains how dancing and fashions have changed since the original performance.

In the Behind the Scenes video, the choreographer details the new methods of dancing; the stylist explains that the new dance moves required a new type of apparel offered by a particular designer, Diane von Furstenberg; then von Furstenberg herself appears to explain how and why she designed her fashions in a particular way.

IRCE 2008 Conference Multi-Media CD-ROM

Nordstrom Silverscreen’s videos are not designed to be directly clicked to produce a buy page as in J.C. Penney’s online TV commercials, nor does it show a direct link from NordstromSilverscreen.com to Diane von Furstenberg fashions. But viewers of the Silverscreen videos can click a link on NordstromSilverscreen.com to Nordstrom.com, where a search for the designer’s name produces plenty of clickable images of her products.

Hotspotting

The technology behind J.C. Penney’s clickable video version—known generically as “hotspotting”—meanwhile, is already capable of far more sophisticated combinations of entertainment and online shopping, experts say.

While viewers of J.C. Penney’s version click anywhere in the video screen to produce a buy page for the apparel products featured at the moment they click, future videos will provide more flexibility in clicking on several items within the video, experts say. For example: When viewing a video commercial for women’s apparel worn by a model walking along a beach, a shopper could click directly on the model to produce a buy page for the outfit she’s wearing, or click on the image of a beachside hotel behind the model to produce a web page for making a reservation at the featured hotel, says a spokesman for Klipmart Corp., a company developing interactive e-commerce videos.

“Hotspotting is not used much yet, but we’ll see the emergence of technology that lets whoever owns the video monetize every aspect,” says Chris Young, CEO of Klipmart. “It could be anything that an advertiser chooses to hotlink—a car in an ad or the shoes on the model showing the car.”

Providers of hotspotting technology like Viewpoint Corp., United Virtualities and Klipmart say the capability for such interactive shopping videos is already in development, and that rolling it out is more dependent on the way retailers and advertisers want to make their online videos interactive.

“Video is here to stay on the web, whether in advertising or other content,” says Patrick Vogt, CEO of Viewpoint and a former executive in charge of web sites at Sony Corp. and Dell Inc. “Consumers are driving it because they want a richer experience on the web.”

New York-based United Virtualities is offering a technology it calls Shoshmosis, which develops interactive HDTV content so that viewers can click on any item in a video viewed on the web to link to an e-commerce page, a pop-up for additional product information, or a complementary banner ad.

M2B World Inc., a unit of Amaru Inc., is planning to introduce to the U.S. market this year TV set-top boxes, already available in Japan and Singapore, that let TV viewers using an IPTV Internet connection use voice-activated controls to access niche TV programs and related e-commerce sites. The TV programs may feature products that are available on M2B’s apparel and accessories site StarzMall.com or beauty products site RoyalHive.com, a spokeswoman says.

The tip of the iceberg

A preview of what’s to come from M2B is now available on RoyalHive.com, where viewers using a conventional web connection now watch a video about actress/fashion designer Jennifer Lopez, then click to a shopping section to purchase products. The video content doesn’t necessarily directly relate to products available on the site for purchase, but is intended to engage shoppers who may be interested in such products, says Colin Binny, CEO of Amaru.

As new versions of video technology appear that mix entertainment and shopping online, most retailers should find a way to play a role, experts say. “This will benefit bigger retailers who can afford the technology more quickly,” Klaris of Kurt Salmon says, “but overall it will raise the bar in retailing.”

Adds Okamura of J.C. Williams Group: “The cost of streaming video is coming down considerably to make it affordable for small and mid-sized retailers. We’re only seeing the tip of the iceberg with this.”

paul@verticalwebmedia.com

Bill Maher stakes his claim to the “Gold Rush” of online retailing

At first, says Bill Maher, political humorist and host of the new “Amazon Fishbowl” talk show on Amazon.com, he wasn’t sure what to make of Internet video programming. “I pictured that delayed, out-of-synch transmission you often see when Matt Lauer talks to Shuttle astronauts,” he tells Internet Retailer in an interview conducted via e-mail.

Plus, he admits that he’s not up on cutting-edge technology. “I’m still trying to figure out how to shave with my Razr phone,” he quips.

But his Fishbowl job is offering something that he can’t get through his HBO TV show, “Real Time with Bill Maher,” Maher says. “Episodic Internet programming strikes me as this vast, unexplored yet-to-be,” he says. “It’s like the Gold Rush. I wanted to stake my claim.”

He figures the Amazon venue offers him the chance to interact with a more mainstream audience than he gets on HBO. “And, best of all, I’ll have the privilege of kicking things around with some of the most creative minds in literature, film, television and music. What’s not to love? We aim to make ‘Fishbowl’ every bit as smart and as engaging as the television shows I’ve done.”

And now that he’s seen the technical quality of online videos, he’s hooked on the Fishbowl. “We live in a consumer culture,” Maher says, “so I’m delighted to be pitching my tent in the middle of world’s biggest, most successful online shopping mall.”

With e-commerce, TV shows can monetize everything

As Amazon.com Inc. and other online retailers create dual roles for their web sites in entertainment as well as e-commerce, TV programs are making their own moves to get a piece of the action in online shopping.

At ShopABCTV.com, for instance, fans of more than a dozen ABC programs can find items worn by actors in TV shows and click to purchase them from one of about 50 retailers or directly from ABC’s e-commerce partner, San Francisco-based Delivery Agent Inc.

The line-up of TV shows includes “Desperate Housewives,” “Grey’s Anatomy,” “General Hospital” and “The View.” Participating retailers include Nordstrom Inc., Neiman Marcus Group Inc., The Sports Authority, Brown Shoe Co.’s Shoes.com, American Eagle Outfitters and Amazon.com.

When a shopper clicks on an image of the character Lynette Scavo from Desperate Housewives, for instance, a page will pop up that shows images of several items worn by the character on a particular episode. Clicking on one of these product images provides further details about the product and the episode, with text explaining what the character did while wearing, for example, her American Eagle blue cotton shirt.

Conversion rates for product purchases run from 1% to 20%, says Delivery Agent CEO Mike Fitzsimmons, who is a former online executive of Circuit City Stores Inc.

“Expanding our relationship with Delivery Agent to build out bigger and better show merchandise boutiques is another example of how we are extending our ABC brand, show by show, to our fans,” says Bruce Gersh, senior vice president of business development for ABC Entertainment.

Delivery Agent, which has contracts with more than 75 TV and movie properties, including programs on NBC and cable TV, posted a 700% increase in revenue last year over 2004, Fitzsimmons says. A privately held company launched in 2002 and backed by venture capitalists Worldview Technology Partners and Cardinal Ventures, Delivery Agent doesn’t report its revenue figures.

But his market is just beginning, Fitzsimmons says.

“There will be a day soon when you can click a TV remote and buy what you see on the TV screen, it’s been in the lab for a decade,” he says. “We’ll be rolling out in the second quarter of this year technology to enable you to do that in a beta test in 300,000 homes.”

He admits, however, that it will take a while to build widespread use of this in homes. Among the hurdles to overcome are the need for consumers to switch to new TV gadgets like Internet-enabled set-top boxes, and the development of common standards for interactive TV—an effort being spearheaded by the industry group iTV Production Standards Committee.