Retailers shift their ad spending from TV, radio and print ads to digital ads.
In the social Internet era, retailers' videos become increasingly valuable.
Online retailer SparkFun Electronics, which sells electrical and mechanical parts for hobbyist tinkerers, has long posted videos on the web to meet various marketing goals, including engaging shoppers, branding, teaching customers about products and inspiring purchases. Then in December the e-retailer found a way to hit many of those marks in one swoop—by hosting live video events.
A monthly live event series features a SparkFun engineer building a project—the first was a somewhat obscure musical instrument, the Opto-Theremin—in a few hours while on camera, with viewers invited to build along. The videos are streamed live on YouTube and simultaneously recorded so that customers can find them even if they miss the event, says Gregg Barclay, the retailer's senior videographer. Sparkfun also embeds the recordings on its web site.
Sparkfun's first event aired Dec. 9, and 74 customers tuned in to watch live. Dozens of them used the comments section beneath the video on YouTube to ask questions that the engineer answered on air, Barclay says. By mid-January, the video had 5,352 views.
SparkFun advertised the event with a short video distributed on its blog and social networks just days before Cyber Monday. The video linked to a wish list of products necessary for the project to encourage consumers to buy so they could build alongside the engineer. Because it launched during the holidays, measuring the exact effect on site traffic and sales was difficult, however the retailer's e-commerce analyst Kirsten Kindt says two items from the wish list "sold orders of magnitude more than average on Cyber Monday" and two others had sales spikes on the Thursday after the event. "The big complaint people had was that we only announced the first event a week beforehand, so [attendees] didn't all have time to get the products," Barclay says.
So, for the second live event—building a "party button" that lights up and plays dance music when pressed—on Jan. 6, SparkFun released a promotional video and wish list earlier. That time, sales of products on the wish list rose 5% in the five weeks around the event compared with the prior five weeks, Kindt says. While in actual numbers that sales increase isn't gigantic—some wish list products went from an average of five sold per day to eight per day, for instance—the retailer continues to see daily views of the video recordings and expects the returns to continue as new customers discover the project and decide to do it, she adds.
Besides the live events, SparkFun staffers produce between two and five videos weekly. They range from product videos, which SparkFun's marketing department project manager Lara Boudreaux says generate the biggest responses, to project tutorials, features of garage hobbyists building with SparkFun products, and a monthly series called "According to Pete," in which Pete Dokter, SparkFun's director of engineering, explains electrical concepts in segments that last as long as 25 minutes.
"In our space, we don't have a choice—we have to help people figure out how to use the products," Boudreaux says. Because videos do that and lead to sales, they are the retailer's top marketing priority, she adds.
Industry data support SparkFun's experience with video. Referrals to web sites from YouTube grew by 52.86% between September 2012 and September 2013, according to Shareaholic, a social content marketing vendor that tracks referral behavior across the more than 200,000 web sites that use its technology. Additionally, shoppers who watched at least one video on an e-commerce site during Q2 and Q3 2013 were 1.81 times more likely to buy from that retailer than shoppers who didn't, according to video production and technology vendor Invodo, which tracked conversions on more than 100 client e-commerce sites.
Nikki Baird, managing partner at Retail Systems Research LLC, says the opportunity for retailers to differentiate themselves with more advanced video implementations is large. "Right now, most of the activity is focused on throwing videos up on YouTube or Vimeo, or maybe experimenting with Vine," she says. (Vine allows consumers to post 6-second videos that play over and over.) "But the retailers who are testing out things like shoppable videos or live video feeds or interactive events have an opportunity to capture consumers' imaginations—and that leads to engagement, which ultimately should translate into sales and loyalty."
While anyone can post videos online for free using services like YouTube or Vimeo, merchants trying new technologies and coming up with more creative ways to reach customers through the medium are finding that video can be a cost-effective tool on several levels: for branding and product discovery, helping customers select items and answering questions about how they work, and encouraging consumer engagement. An outstanding video can touch on all those areas at once.
Youth fashion retailer Urban Outfitters Inc., for one, finds that customers respond when it posts videos on Vine, says senior marketing manager Moira Gregonis. Those videos get hundreds or thousands of Likes apiece, plus many shares and impressions, she says, declining to reveal exact numbers. The retailer shares Vine videos on Twitter, too, and sometimes links to them in e-mails. Urban Outfitters began posting about one Vine video a week shortly after Twitter launched the video service in January 2013.
While merchants can't add links on Vine, Urban Outfitters always includes the full product name in the descriptions and can track an indirect lift in the number of page views for the highlighted products afterwards, Gregonis says. For example, after Urban Outfitters posted a 6-second clip showing how to use a Fuji Instax camera, it saw an increase in the number of consumers who typed "Fuji Instax" into the search bar at UrbanOutfitters.com, she says. Instructional videos, such as beauty tips with Urban Outfitters makeup, tend to track similarly, she says.