Greg Sterling Interview

greg-sterling.jpgAs video advertising on the Web heats up SpotXchange President and CEO Michael Shehan talks to former Kelsey Group Analyst Greg Sterling about how local advertisers can leverage the channel.

Michael Shehan: Analysts are saying that local video ads should generate $5B per year by 2011 from the projected $371M in 2007. That would be going like from one to 100mph in one second, how does this happen?
Greg Sterling: Forecasts are often aggressive to get attention for the firms generating them. They tend to make the numbers touch the outer envelope of the credible and compress time frames accordingly. However, brand advertisers and even local businesses are very interested in video for many reasons. It performs better than traditional display advertising. And display advertising is the fastest growing online ad segment. So online video advertising will certainly grow. Whether it will reach the projected $5 billion in the time frame above is another question.

MS: Who are going to be major players bringing local advertisers into online video advertising? Yellow page companies, search engines, and/or smaller interactive shops?
GS: All the yellow pages publishers and some independent sites. Then there are also the direct-to-merchant vendors such as Spotzer and SpotRunner, among a few others. But mostly it will be existing sales channels that have SMB advertiser relationships.

MS: Are there certain local small businesses like plumbers, restaurants and auto dealers that are more appropriate for online local video advertising?
GS: I suppose that where visual information is essential to the consumer purchase decision that would make those categories of businesses better suited to video. However, the additional information that video conveys and the emotional impact of video makes it more effective than simply having a profile or text ad regardless of the category.

MS: As yellow page companies have proved, you have to make the business proposition very simple to small business advertising. So what business model will dominate for local online video advertising–cost per click, cost per impression, or something else?
GS: We’re in a period of experimentation and more than one model will exist in the marketplace. Citysearch uses a model that “throws in” video if an advertiser spends a certain amount of money. YellowPages.com uses a flat-fee model and Superpages is using a per-stream, performance-based model. 

MS: Are there any lessons from the past in the yellow page space that can be applied here to this emerging space?
GS: You mentioned simplicity. That’s key for the sales rep and for the local business. That’s the primary lesson. Also having a cost-effective but professional way to produce these ads is critical. Syndication is another important lesson. This is what the yellow pages eventually discovered they had to do with their PPC ads and profiles in order to build more views and clicks–get the ads to where the consumers were rather than expecting all the traffic to come to their sites.

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