Wednesday, February 25, 2009, 9:19 AM ET|Posted by Will Richmond
The ad business in general may be in the doldrums due to the economic downturn, but one space that's bustling with innovation is online video ads for local, small-to-medium (SMB) sized businesses.
Local advertising has of course been around since the beginning of time. And even the idea of allowing local SMBs to create video ads is not a new concept; cable operators' local ad divisions have been doing this for years. What's relatively new in the local ad space are companies that allow a far higher degree of self-service video ad creation and campaign management by the client, online placements of their ads, and much improved analytics and ROI measurement capabilities vs. traditional cable TV.
For some local merchants, engaging in this process will be overwhelming and they'll stick with the tried and true local options like newspaper, radio and yellow page listings. But I believe that for many others, who recognize that their customers are increasingly going online to find local merchants and understand that a video packs far higher emotional punch than a text ad, this new alternative will be highly compelling.
There are multiple fairly well-funded players covering the local SMB video ad space, each with their own particular points of differentiation. They include Spot Runner, Spot Mixer, Jivox, Mixpo, PixelFish and others. Some like Spot Runner don't limit themselves to online distribution only, they're targeting TV as well. But the basics are relatively similar: a low-cost, often self-service ad creation process, a pretty well-defined way of targeting the intended audience through locally-oriented sites, and fairly flexible campaign/spending options. A persistent goal is to make it incredibly easy and cost-effective for local SMBs, who have most likely never done anything like this, to get up and running quickly.
To get a better feel for this all works and how SMBs are benefitting, I recently spoke with both Jim Gustke, VP of Worldwide Marketing at Jivox and Stephen Condon, VP of Marketing at PixelFish. Jivox, which raised $10.5 million last summer, reported that it doubled its customer base in Q4 '08. Jim said a real differentiator for the company is its publishing network of 800 premium sites and 65 million monthly unique visitors. This allows it to offer advertisers improved targeting and analytics vs. competitors who can only promise placements on affiliated sites. Jivox video ads auto-play in a 300x250 window on the publisher's site with audio off until initiated by the user. Better still for the advertiser, Jivox only charges for ads when 100% of the video has been viewed, thereby providing a pay-for-performance value proposition as well.
Jim said the most popular local categories include cosmetic surgeons, dentists, contractors, hospitality and legal. Demonstrating how active the category is, most of Jivox's new business has come through search. New advertisers pay as little as $250 to get started.
Meanwhile, Stephen explained that PixelFish employs a more customized and channel-centric approach, getting 80% of its business through partners like YellowBook, Google TV and others who are interfacing directly with the SMBs. That means PixelFish overlaps a bit with TurnHere and other video production networks. When one of its partners generates an order, PixelFish taps into its network of videographers to shoot specific footage which is then centrally edited and produced for the client. Through online editing tools recently acquired from EyeSpot, the advertiser can make changes to the ad himself and continue to make updates to it as offers change.
"Democratization" is a much-overused word, but here I think it really does apply. Even with local cable advertising, the cost of producing and running a TV ad has been prohibitive for many local merchants. These new companies are changing that, making video advertising accessible and affordable for the first time for broad swaths of local SMBs. Incumbents like local cable, newspapers and radio need to prepare themselves as the power of broadband and search-based marketing disrupt their status quo. I'm expecting this new crop of companies is going to drive a lot of change in this space.
What do you think? Post a comment now.