Revenue increased 11.9% in Q1 of 2015, to $17.26 billion compared with $15.42 billion in the year-ago period.
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The levels of effort and cost involved in producing an online video strategy also differ among retailers. At the high end are retailers like Drs. Foster & Smith, which is building its own video production studio to produce high-definition product and educational videos to complement the content customers are accustomed to seeing in its TV programs. HSN.com, the e-commerce site of IAC InteractiveCorp’s Home Shopping Network, is also on the high end, leveraging its connections with TV personalities like chef Wolfgang Puck in several types of video content.
Gordon Magee, manager of Internet marketing and analysis at Drs. Foster & Smith, says the retailer plans to expand its video inventory to hundreds from the fewer than 10 currently on DrsFosterSmith.com. “We will have a ton of videos from how-to’s to things on our company’s history,” he says.
And in keeping with the high level of video quality consumers expect from its “Faithful Friends” TV program, it will produce only high-definition, professional video content, Magee says.
Follow the video
HSN, which presents more than 12,000 videos on its site, uses video in a three-step strategy. First, a “green-screen” technique presents the sole image of a celebrity like Wolfgang Puck-appearing as if he just walked onto the page itself-to initially engage shoppers in the HSN cooking section. That is followed by a video of a lesson in how to create, say, Puck’s Mango Sorbet dessert. Finally, another video explains in detail how to best use products HSN.com sells alongside the videos to help make cooking chores (theoretically, at least) a proverbial piece of cake.
HSN develops its video content with Flash technology from Adobe Systems Inc., then manages placement on its site as well through external sites like YouTube with its Digital Assets Right Technology content management system, developed in house.
HSN won’t reveal the exact impact its videos have on sales, but they produce “a substantial lift,” says William Lynch, executive vice president in charge of marketing and content at HSN.com.
Other retailers take more modest approaches in deploying a video strategy, though the approaches still have several options to consider in technology and support services. Ice.com, which can produce about 50 product videos per day, spends on average about $60 to produce each video, including the $500-per-day cost of hiring models, and the fees it pays to a professional photographer (a photographer who usually does weddings and bar mitzvahs, Gniwisch says) and Internap Network Services Corp., which serves up Ice.com’s Flash video content through its content delivery network. Ice currently has videos for about 500 of its 2,000 product SKUs, though it plans to cover all SKUs with videos this year, Gniwisch adds.
A typical Ice.com product video such as one for a diamond ring priced at more than $2,000 runs 20 seconds and shows the ring by itself as well as on a model as she holds her hand to her face.
To ensure fast loading and quality presentations of videos, Evogear and other retailers also rely on content delivery network services from companies like Akamai Technologies Inc., Lime Wire LLC and Pando Networks. Retailers use basic content management software to manage the placement of videos on their e-commerce sites, though Akamai offers StreamOS, a content management system designed specifically for video.
While product videos on e-commerce sites are having the strongest and most consistent impact on sales at Ice.com and other retailers, video exposure on video-sharing sites also is spiking sales in some campaigns.
Eight videos Ice.com produced last year for Valentine’s Day cost about $1,200 and led to about $200,000 in online sales, Gniwisch says. The ticket to results, he adds, was running a timely campaign designed to attract a lot of attention. In each video, Ice.com executive vice president of marketing Pinny Gniwisch plays “Mr. Cupid” and interviews passers-by in New York and at the Deer Valley ski resort in Utah about what they think are the best and worst Valentine’s Day gifts. Some of the surprising answers, including one from a man who said he should only receive gifts and not give them, have received more than 10,000 views. Each video closes with the attribution, “A Project by Ice.com.”
Building the brand
Retailers are also exploring other ways to extend videos beyond their own e-commerce sites. In a brand-building campaign, The North Face posts sports videos on sports-related community sites like Go211.com and Biglines.com, and it uses Rip.tv to post videos as well as have them distributed to other youth and sports-related web portals. It also places video-enhanced ads on sports-content sites including Gorp.com and FreeSkier.com
In addition, The North Face pushes video content out to customers with widgets on their personal pages on Facebook.com and Google Inc.’s iGoogle.com. The project is tied to search marketing campaigns, which let viewers click into a video-enhanced search ad to insert a widget icon onto their personal web pages for receiving additional video content.
“We then can push snow sports and other videos out to consumers’ Google or Facebook pages,” Gallagher says. The North Face also is working with Fluid Inc., a web site design firm, to develop the ability to track how often users of widgets on Facebook and iGoogle view its videos.
Although she is not yet able to quantify results in traffic to TheNorthFace.com, Gallagher says search and banner ads that include video content have shown a higher than average click-through rate compared with ads without videos. ValueClick Inc., which provides technology for running video ads that lead into non-commercial videos, says video ads have shown click-through rates 10 times as high as banner ads.
HSN recently started working with a new service from Google that lets retailers position product information and Buy buttons on the same web page alongside a video on YouTube.com, following the same mix of marketing and merchandising available on HSN.com’s own pages. It’s another example of how quickly video and e-commerce are evolving, Lynch says.
“Two months ago we were using YouTube just for branding,” he says. “But we think this is the future of e-commerce: Give people better ideas on how to do things in engaging online video, and present all the products they need right on the same web page to make it happen.”