Firms are emerging to serve properties like Citysearch, YellowBook, and even Clear Channel to provide video ad products to small businesses.
Business listings sites, Internet yellow pages properties and other local media firms want to get into the video ad business, but that doesn't mean they want to be in the business of video ads. As properties like Citysearch, YellowBook, Superpages and even Clear Channel get serious about providing video ad products to small business clients [SMBs], a handful of video production services have emerged to meet their needs. And in turn, those video services hope to benefit from the sales forces of their local media partners.
As in any burgeoning business sector, local video ad production vendors are grappling with decisions involving price points, business models and the best markets to enter.
"[Local media sites] want to push this because they think consumers value the video, and it makes them stand out in a growing field of local destination sites," said Greg Sterling, principal analyst of local media consulting firm Sterling Market Intelligence. "If Citysearch and the YP sites are going to have video, Yelp and Yahoo are going to have to eventually as well."
Several business directory sites and local review sites have introduced video ad enhancements in recent months. Yellow Book USA began testing video ads earlier this month, some of which have been produced by DMM (Denver Multimedia), a 12-year old TV commercial and infomercial production house that just got into the local video ad business about a year and a half ago.
Idearc Media's IYP provider Superpages.com has also started testing video ads with multiple vendors, while IAC/InterActiveCorp's Citysearch launched a video ad business listings up-sell in May through a partnership with advertorial video maker TurnHere.
"Directory publishers and others with sales channels like Citysearch are a natural partnership target for these companies, given their local sales channels and access to millions of SMBs already," said Sterling.
MerchantCircle is revisiting video ads after a failed attempt a year or so ago. The online service providing free Web profiles, newsletters, blogs and Web coupon tools to SMBs has discussed possible business partnerships with firms such as TurnHere and Spot Runner, according to MerchantCircle President of Business Development Doug Kilponen.
"We're about to begin poking around in this space again," said Kilponen.
In its first foray, the company had trouble establishing price points suitable for its small business clients, in part because MerchantCircle offered distribution of its video ads on cable TV, which raised the cost beyond what was feasible for smaller ad clients.
Because consumers generally respond to video at higher rates than other display ads, said Sterling, "I think perception of the value of video will allow it to be priced higher than some other products." Superpages, for instance, will charge somewhere below $1,000 for a :30 Web spot.
MerchantCircle will probably begin offering its new video products in major metros, but scaling into second tier markets is important down the road. "A big concern for [companies in this sector] will be to see how they are going to scale when they go beyond the top 25 cities," said MerchantCircle's Community Relations Manager Kevin Leu.
New YellowBook partner DMM aims to make its custom video ad prices lower than other similar services through what it claims to be more efficient production processes. It's been producing video ads for Clear Channel's local radio Web sites for about a year, according to DMM President Bob Kennedy. The company, which considers itself a direct competitor of TurnHere, is also negotiating with other national yellow pages firms to help connect with SMBs.
Like TurnHere, DMM contracts with a network of video directors around the country that shoot ads on the premises of small merchants, making for personalized Web video ads.
New company AditAll is going the automated route in the hopes of attracting small businesses with simpler tastes and smaller budgets. The soon-to-be-launched firm expects to charge an average of $400 for :10-:15 online video spots built using a mixing platform that offers about 20,000 rights-cleared stock clips and soundtrack archives.
Other firms like Spot Runner, EZShow and Visible World have also taken the more pre-packaged approach, which, though less personalized, makes for lower prices, streamlines production, and may lead to fewer service headaches from picky clients.
AditAll has met with local sites and directories firms, but has yet to choose a specific pathway to garnering advertiser clients, according to Rodger Wells, AditAll's VP marketing and business development, who said the firm is keeping options open.
No matter how they reach small advertisers, it's too soon to gauge how many of the over 24 million SMBs estimated to exist in the U.S. by the U.S. Small Business Administration will want to use these new services. When surveyed for an upcoming study from Opus Research, 33 percent of small businesspeople said they have plans to create a promotional video ad in the next 12 months.
Still, such an investment is considered a luxury purchase for many advertisers. "It's like buying a speedboat," said MerchantCircle's Leu.
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Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.
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