Online Video Ads: What Small Business Advertisers Need To Watch For

According to comScore, U.S. Internet users watched 11.5 billion online videos in March, 2008. The average viewer watched nearly three hours of video online. These statistics make video an attractive means for advertisers to reach their audience, and in turn, a potential windfall for online video hosts such as YouTube and Google. So far, however, online video sites are finding that users want to be entertained with online video and not necessarily watch commercials. So how do small business advertisers effectively tap into the online video craze and relay their messages to target audiences? Well, that opportunity is here but is not always easy to figure out.

Here are some things that advertisers will want to consider as they ponder their first—or next—online video advertising campaign.

Understand how consumers use commercially-oriented videos in their search and buy process. Consumers watch non-commercial videos on YouTube for entertainment. Unless your video is funny, informative, or entertaining in some way, it’s unlikely that people will simply want to watch it. However, when consumers need a product or service, they are active and more willing to view content like video to help in their buying process. Consumers typically will watch online videos when they are trying to finalize a vendor selection or purchase decision. That is why local search and IYP sites may offer the best opportunity to get in front of the right audience that has the “right” mindset.

Know who to target and where to reach them. Is the audience local or national? If national, advertisers will obviously want to take a broad-based approach and focus on some of the larger search sites. For many small businesses, however, local targeting is more important. If this is true, the advertiser will need to find ways of getting their video to display where the local audience will see it, including local media sites, newspapers, and local search sites, such as Internet Yellow Pages (IYP) sites.

Decide on the appropriate type of video and determine the cost. Most small businesses will be starting from scratch and need to have video produced, either by an ad agency, video production house, or web site publisher. Costs of production will vary based upon a number of factors, including production time. Some publishers offer certain packages that include video production, hosting, and distribution of the video beyond their own site to a network of others, including YouTube, Yahoo! Video, and more. Many of these publishers will also place restrictions on how and where the videos can be used.

Determine the best site(s) for the video. Consider that social networking sites like MySpace and Facebook were created as places for people to gather and share interests with their network of chosen friends. Users of such sites may not immediately be accepting of advertising, but they may be open to viewing ads from small businesses that cater to the interests of their social network– a local coffee shop or store that deals mainly in specialized interests, for example. So, these types of businesses should consider running their ads on social networking sites. Other sites, such as YouTube, Google, and others, can be more effective for advertisers that specialize in more generalized products and services or are looking for brand exposure or buzz (and remember, having an entertaining ad helps a lot here). However, businesses seeking to attract local buyers are likely best served by going with a local search or an IYP site, where customers are generally searching by city, neighborhood, or ZIP code.

A caveat: IYP sites may be the best place for local businesses interested in creating and publishing online video ads, but advertisers should find out if the IYP plans to distribute it to other relevant video sites on the advertiser’s behalf. If they are not or will not, they should. That will take a significant burden off the advertiser to have to manage their video in various formats and figure out how to distribute it to various online sites.

It should be noted that while the small business advertiser can certainly take it upon themselves to post video on many sites across the Web, many of these businesspeople lack the time to do this and the in-depth expertise to know which sites would be most appropriate. For them it could make sense to work directly with a firm or publisher that specializes in search local search marketing and can advise them on and manage their video advertising campaigns.

Understand that the business model for video-online is evolving. Local search sites have mistakenly focused on video as a premium service in the past. As local search business models evolve to be more pay-for-performance, this too will change. More and more companies are planning to drop their premium-priced video offers and allow advertisers to link their own videos for free from their online profiles. All of this is in preparation for the day when local search sites charge advertisers on a pay-per-view or pay-per-action basis.

Above all, the advertiser must:

Remember that consumers aren’t shopping for videos; they’re shopping for products and services. When consumers perform online research they are primarily interested in first finding general information about businesses that suit their needs. Consumers begin by looking at things like types of services they offer, proximity to a particular location, peer reviews, etc. Only when they have a good idea of where they might like to buy do consumers typically view a business’s video; it’s one of the last stages in the buying process. This makes video extremely valuable for the small business, as it can help to visually “sell” the business to a prospective customer and help the customer decide that the business is right for them. If a consumer clicks on a video ad, it usually means that they are very close to contacting a business—yet another point of reasoning that is driving publishers toward investigating pay-for-performance models.

Make no mistake—there is money to be made through the use of online video ads. To take advantage of this, however, the small business advertiser needs to understand how people are using the ads, where they should be placed, and what type of options publishers are both currently presenting and considering implementing. Armed with this understanding, small business advertisers can surely monetize the power of online video ads.

Jeff Porter is a vice president and general manager at R.H. Donnelley, where he oversees the development, implementation and marketing of DexKnows.com, one of the leading local search sites in the United States.