Video Model Yet to Be Determined for Yellow Book and Other Local Ad Providers

Now that local advertisers recognize the importance of establishing a Web presence, local media and directories services are hoping they flock to the Web medium of choice: video. Independent print and online yellow pages publisher Yellow Book USA is the latest to begin testing video ads for local business clients. Still, companies have yet to determine the sweet spot for video products and pricing models.

Thus far, Yellow Book is simply testing video technology, linking video clips from listings for a handful of small and medium-sized businesses including Virginia-based plumbing contractor All Plumbing and Austinuts, a purveyor of dried fruits, candies and nuts out of Austin, Texas. The company will begin market testing video products in future months, according to Alfred Chow, the head of Yellowbook.com, who said the firm is in the process of planning which markets and advertiser verticals will be most appropriate for the trial.

“We’re taking a broad approach because we think [the video products] should appeal to most of our advertisers,” he said, noting the number of trial advertisers will be “statistically significant.”

Local merchants certainly have a multitude of opportunities to post their own promotional videos online for free to sites like YouTube, Metacafe or MySpace, but that doesn’t mean they’re doing it. Many believe it will take middlemen like yellow pages publishers or other online local service providers to guide local business owners toward Web video and educate them about it.

“A very small percentage of [local advertisers] are capable of putting video on the Web themselves,” said Kelsey Group Program Director Peter Krasilovsky. “Yellow pages companies are in the perfect position to provide video technology and findability…and it’s a great up-sell for them,” he continued.

In a September 2006 report, Borrell Associates pegged local online video ad spends at between $75 and $100 million, and expected local video advertising revenues to “to grow significantly in the coming years.”

Internet YP provider Superpages.com, owned by Dallas-based Idearc Media, started testing its video offerings in Seattle, Los Angeles and San Francisco markets in July. IAC/InterActiveCorp’s local business review site, Citysearch, introduced its own video service to its pay-for-performance local advertisers in New York, LA, San Francisco, and Chicago. The Citysearch videos are produced by commercial short-film producer TurnHere.

Local community startup Smalltown, which lets businesses create free and paid Web sites, now allows them to add video, too.

Superpages told ClickZ News in July it had yet to settle on a pricing plan for video, but the company estimated the production charge for a 30-second clip would be below $1,000, with separate fees for placement and distribution.

According to Krasilovsky, local advertisers probably won’t want to spend much more than a few hundred dollars on an online video promo.

Determining a viable price point for video was difficult for local business referral service MerchantCircle, an online service providing free Web pages, newsletters, blogs and Web coupon tools to local companies. In addition to pricing being “a big problem,” MerchantCircle’s PR Manager Kevin Leu said proving return on investment was tricky. The firm has since discontinued the offering, but anticipates introducing another video product in the coming months.

Pricing models are “exactly what we’re trying to understand in our market trial,” said Yellow Book’s Chow, who said things like product positioning, video presentation and distribution also remain up in the air. “We’re going to do whatever’s best to get exposure for our advertisers,” he said, noting Yellow Book has distribution agreements with Google and Yahoo.

Intermediaries such as MerchantCircle, Yellow Book, Citysearch and others are necessary to educate small businesspeople and ease the process of online video advertising, believes Leu. “We’re trying to make sure the business owner doesn’t think it’s going to be a big production,” he said.

In terms of video production, Yellow Book has yet to choose a vendor or vendors to create videos for ad clients; at this point, videos featured in the tech trial were developed by Denver Multimedia, a firm specializing in video production for IYP and search firms. “We’re also looking at other vendors,” said Chow, adding, “Everything is on the table.”

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