Retailers Wrestling With How To Use Consumer-Generated Video

When North Face—a unit of the $7.2 billion VF Corp. and a major manufacturer of athletic gear and clothing—officials started looking at the tidal wave of consumer-generated Web videos being created, they saw consumer passion. It's the same kind of passion that exists in sports enthusiasts, which is who the retailer needs to reach.

Those North Face executives are far from alone. As retailers and consumer goods manufacturers have been watching—mesmerized—consumers watch more than 10 billion U.S. Web videos in February, they have tried to figure out ways to make it work for them.

Some 77 million consumers crafted homemade videos last year, a number projected to grow to 83 million this year and 108 million by 2012, according to April figures released by eMarketer.

But it's a brand new area and, as such, is fraught with dangers. Should retailers hire film crews and make their own videos? Or would such efforts be dismissed as little more than promotional TV commercials?

No, the power of those videos lies in the passion of their low-budget creators, coupled with credibility.

One thing that North Face is experimenting with is to select many of those amateur videos and repackage them for other consumers via a Google gadget. They call their effort Defy.tv and they offer a consumer-generated video of the day.

But North Face's video partner doesn't see the company as a mini-YouTube. The intent is to take those videos and annotate them when North Face products are seen and to offer embedded links for more information and the ability to immediately click and buy.

This is an impressive and commendable effort, but it raises some difficult issues about credibility. Will this "repurposing" be seen negatively, as taking neutral consumer-crafted content and selectively turning it into commercials? Would North Face ironically risk losing the huge credibility that attracted the company in the first place?

What if retailers took the next huge leap and started annotating everything in those videos? It would be providing information and links to everything shown--including, from time to time, gear from direct rivals. Ludicrous? Perhaps. But it could also illustrate the intended transparency of the Web.

There's a fine line between advertising and information, and it's often influenced by the mindset of the consumer at that moment.

Let's say that a consumer is on a national news Web site and wants to read a story about the presidential campaign. The consumer clicks on the story and, instead of reading about political mudslinging, he sees a video commercial for a Toyota sedan. The consumer is annoyed, perhaps even furious. He thinks of the video as SPAM and interruptive. He thinks unkind thoughts about that Web site and certainly about Toyota.

But a week later, this consumer's car dies. He suddenly needs a new car, and he needs it fast. If he hits a car Web site—or perhaps even Toyota's Web site—he might want to see that exact video, the one that he cursed just a few days earlier. That video is now information, and desired information. Same video; same consumer. But a mindset change makes all the difference.

Apply that same dynamic to consumer-generated video. If the videos are only showcasing one vendor's products, there's not much credibility. But if that same site offers links about everything in those videos—from clothing and equipment to the height and location of that snow-covered mountain in the background—those links are seen as information, and helpful information at that. In short, full credibility is likely retained. Suddenly, those links get a lot more clicks and revenue is impacted much more.

But wait, you say. Aren't your rivals also getting sales? Yes. That's the beauty and the transparency of the Web. The bulk of those sales go to the skis that look the most sturdy, the parkas that look the most attractive and whose wearers appear to be the most warm.

If this is applied fairly and evenly, the number of videos featuring your gear becomes more numerous. The user community makes their own kings.

"Today there is a big gap between the compelling content that gets created and the products that they are associated with," said Andy Lloyd, the CEO of Fluid, the San Francisco-based interactive content firm that created Defy.tv for North Face. "You're giving them interesting content, a non-invasive way of pushing those new videos."

The Google gadget effort is not the only place for those videos at North Face, said Sarah Gallagher, North Face's senior manager for interactive marketing. She wants to use those user-generated videos through the company's Web site.

"We want to let people customize their experience. Some might say 'I only want to see a snowboarding experience,'" Gallagher said. "So instead of having one homepage, we could have five. Five different homepage experiences. Our start templates will let you choose which one you want to start with." That goal is for the end of this year, she said.

But the Google part of North Face's trial lets the company uses the same video facilities of YouTube itself. And the search engine leader is hoping a lot of retailers try similar approaches.

John McAteer, the head of retail efforts at Google, argued that such video efforts can also be limited, allowing a company to try various approaches, screw up and still have plenty of second chances.

"If it's not good content, if it's not engaging, it's not going to be a success," McAteer said. "But in the YouTube world, if it sucks, change it tomorrow and a different million (people) will engage with it tomorrow."

The issue of annotating those images—of adding information and links on top of those videos—is where things get tricky. Last year, a major consumer magazine featuring stories mostly about Hollywood, celebrities and gossip realized that many of its readers wanted to dress, accessorize and act like the celebrities they wrote about. (Don't ask. They just do. And, yes, we still allow these folk to drive cars and vote in elections.)

The publication had the idea of adding similar links to their news photos, on the rationale that information about the jewelry, clothing and makeup being displayed—including links to buy it—would actually be desired information for those readers.

But the publication's launch of this program featured annotation of an incredibly small number of photos and very little of those photos. The execution certainly undermined the intended audience, and it then went very quiet.

That publication's experience illustrates a core problem with this kind of approach: It's really time-consuming, and it requires an ongoing commitment of time and effort. Even worse, despite Google's "there's always another million eyeballs around the corner" rationale, there is a credibility price to be paid if the initial launch doesn't deliver enough to wow the audience.

"It's very unlikely to have any value at all if it doesn't change very often" or go deep enough, said Jason Meugniot, the CEO of Guidance, another interactive company. "If that happens, the value of the brand diminishes. They're not seen as competitive. It just discredits them and diminishes the brand over time."

If it's done aggressively, though, Meugniot argued, "it's not going to seem like a commercial. It's going to maintain that credibility. It's also allowing potential customers to browse and make purchases that they wouldn't otherwise make."

Even when that means helping drive an occasional sale to a rival? "There is greater credibility in an equal playing field," Meugniot said.

Clearly, established retailers are not at all comfortable with taking a neutral approach to video annotation. But it's also the path of least resistance in the market. Confronted with a tidal wave of user-generated videos, should a retailer ride that wave or try to push it in a different direction? Which is likely to have the better chance for success?

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