Shoppable Video: A Key Marketing Channel to Engage with Online Shoppers

Transcription

1 Shoppable Video: A Key Marketing Channel to Engage with Online Shoppers Shoppable video and online video marketing are becoming key marketing tools for brands, fueled by the fast growth of online video traffic. In this report: 1) We show how online video is a convenient and effective way for brands to communicate with customers, and how online video is expected to become the main way users browse the Internet. 2) We describe how companies are taking advantage of the growth of online video by investing in online video marketing. 3) We feature takeaways from our interview with Karoline Gross, Founder and CEO of interactive video technology startup Smartzer. Deborah Weinswig Managing Director, FGRT deborahweinswig@fung1937.com US: HK: CN:

2 Introduction Online video is becoming a key marketing channel for brands. As Internet connections become faster, devices more powerful and mobile phone screens more browsable, online videos are becoming a preferred way for consumers to receive marketing messages from their favorite brands. As a result, shoppable video content is becoming a marketing tool for brands. This report provides an overview of the potential of the shoppable video market, by examining how brands marketing videos are perceived by consumers, reviewing the growth forecasts for online video content and looking at what brands are doing to take advantage of the growth in online video. We spoke to Karoline Gross, Founder and CEO at Smartzer, an interactive video technology startup, to get to know more about her firm and the shoppable video industry, and in this report, we outline the main points discussed in our interview with Gross. Faster connections and larger smartphone screens make watching videos a very convenient way for consumers to explore content. Shoppable Video Becomes Key for Brands as Internet Video Grows Shoppable video technology consists of online video streaming with embedded clickable links that direct the viewer to further information about the item clicked on or to a page that allows them to purchase the product. Faster connections and larger smartphone screens have made watching videos a convenient way for consumers to explore content. According to a survey of over 1,000 global consumers by marketing software firm HubSpot, 54% of consumers consider video the preferred medium through which to receive marketing information from brands, versus 41% opting for imagebased content. The vast audience that online video attracts makes it a powerful marketing tool for companies. Video content is easily accessible and, thanks to interactive content, gives viewers the option to choose what to see, which is very engaging for consumers. More than 62% of Internet users worldwide viewed digital videos in 2017 a total of 2.15 billion digital video viewers according to estimates by market research firm emarketer. Video has a higher impact compared to other forms of media, with 43% of global consumers regarding video content as the most memorable mode, versus 36% for images and 18% for text. Meanwhile, 51.9% of marketing professionals worldwide consider video as the type of content with the best return on investment, according to HubSpot. Online video is a fast-growing channel. We estimate consumer Internet video traffic (consumption of online video measured by quantity of downloads) will grow at an annual compound growth rate (CAGR) of 29.0% during the period , according to our analysis of data from tech firm Cisco. Globally, consumer Internet video is expected to account for 81.4% of all consumer Internet traffic by 2021, according to our analysis of Cisco data, as shown in the following chart. 2

3 Figure 1. Consumer Internet Video as a % of Total Consumer Internet Traffic (Measured in Volume of Data) 79.0% 80.4% 81.4% 77.0% 74.7% E 2019E 2020E 2021E Consumer Internet video traffic and total consumer Internet traffic are measured in terms of Internet Protocol (IP) traffic that crosses the Internet in Petabytes per month. Consumer Internet video includes short-form Internet video (for example, on YouTube.com), long-form Internet video (for example, on Hulu), live Internet video, Internet video to TV (for example, Netflix through Roku), online video purchases and rentals, webcam viewing and web-based video monitoring (excludes P2P video file downloads). Source: Cisco/FGRT Companies are investing in the production of video marketing content to engage with customers in order to capitalize on the fast growth of online video traffic. Companies are investing in the production of video marketing content to engage with customers in order to capitalize on the fast growth of online video traffic. In the US, companies invested $135 billion in digital videos in 2017, according to video production firm Magisto. Fashion brands including Burberry, Ted Baker and Sandro have already embraced shoppable video technology. For example, Burberry s shoppable runway enables viewers to click on items worn by models to get more information about the product and to access a page that allows them to purchase the item. Source: Smartzer.com Companies offering shoppable video technology include Smartzer, Wirewax, Cinematique and Vue.ai. These firms embed a piece of software in the brands video content to make it shoppable by matching the items shown in the video with the brand s online catalog. 3

4 For this report, we met Karoline Gross, Founder and CEO at interactive video technology startup Smartzer, to learn more about her firm, the shoppable video industry and how brands can benefit from the use of shoppable video technology. Interview with Smartzer s Karoline Gross: How Shoppable Video Helps Traffic and Revenue Generation Smartzer turns brands websites and social media video content into shoppable experiences. Here, we outline the main points discussed during our interview with Gross. Smartzer is a video technology company that enables brands to generate sales from video content and to capture detailed analytics. 1) What Is Smartzer? Smartzer is a video technology company that enables brands to generate sales from video content and to capture detailed analytics from customer interactions with video. Thanks to Smartzer s video-tagging technology, consumers can click on an item within a video to get further information and access a link to buy the item. Source: Smartzer 2) The Company Smartzer was founded in 2012 and is headquartered in London with a team of 10 people. Smartzer has undertaken three angel fundraising rounds since its inception, during which it has raised about $1 million. Smartzer s client portfolio includes luxury firms LVMH, Burberry, Valentino and department stores Galeries Lafayette and John Lewis. 3) Problem Addressed and Solution Provided Visual content has a high impact on today s consumers, and videos have become a key form of communication on social media. Video content is a powerful marketing tool for companies selling online. However, it is not always easy for consumers to locate where to buy items promoted in videos on brands websites. Shoppable videos overcome this issue. Smartzer s video player adds clickable hotspots to brands videos that enable viewers to click on the items they are interested in purchasing as they appear in the video, to get more information and to access a link to a page where they can buy them. 4) Market and Opportunity There is strong potential for further expansion of the shoppable video market. Nearly all brands with a presence online and on social media offer video content, but few have adopted shoppable video technology. 4

5 Currently, the main industries for Smartzer are fashion retail and luxury, and the company sees these industries as offering the greatest opportunities for expansion in the near future. 5) Competitive Advantage Smartzer claims that simplicity is its competitive advantage. The company provides a simple technology for brands to implement, and it simplifies and improves the consumer s shopping experience. Shoppable video helps to increase traffic and to generate revenue. In 2018, Smartzer will launch a self-service shoppable video service. Smartzer provides an all-in-one software service that includes a video player, video tagging software and a data analytics component, which enables brands to track a variety of indicators including views, number of clicks, top products clicked and video performance. 6) Competition Wirewax and Cinematique are two of Smartzer s closest competitors, but the two companies offerings are slightly different to Smartzer s. Wirewax: Wirewax is more focused on interactive video experiences aimed at entertainment and gaming content, including branching videos and 360- degree interactive videos. Cinematique: Cinematique develops touchable videos that enable viewers to interact with the content and save the interactions for the viewer to later see more information. 7) User Results Shoppable videos help to increase traffic and to generate revenue. Companies that have adopted Smartzer s service generated on average an increase of 51.4% in consumer interaction, a 10.6% increase in clickthrough to product detail page (PDP), a 22.5% video completion rate and a fivefold increase in sales conversion. For some brands that adopted Smartzer s video tagging technology, shoppable videos generated 30.0% of their total online sales of the collection featured in the video. By generating more traffic, videos facilitate the upsell of other items. Some clients reported that despite that 80.0% of the products they sold did not feature in the video content, customers were able to get to the relevant page through the video. 8) Revenue Model Smartzer generates revenue by charging customers on a per-video basis for a fully managed service. In addition, a monthly fee based self-service license will become available in the first quarter of ) Management Team Smartzer s management team consists of Founder and CEO Karoline Gross, who looks after the commercial side of the company, and CTO Jonny Brankin, who focuses on the technical aspects of the business. 10) Outlook Smartzer is expanding its international presence by setting up offices in Paris and New York, where the firm has a strong customer base. The company is also planning to expand beyond Europe and the US to China and the rest of Asia. In 2018, Smartzer will launch a self-service shoppable video service that will enable clients to create their own shoppable videos. 5

6 Smartzer is also working to strengthen partnerships with distribution partners, including agencies and social media platforms, with the aim to generate more business. While Smartzer currently focuses mainly on fashion, luxury and beauty brands, in the future, it might consider expanding to other verticals. Key Takeaways With the rise of online video traffic, shoppable video is becoming a key marketing tool for brands: The majority of consumers see video as the preferred medium to receive marketing information from brands, according to HubSpot. The vast audience that online video attracts and its high impact make it a powerful marketing tool for companies. More than 64.0% of Internet users globally viewed online video in 2017, according to emarketer, while 43.0% of consumers consider video content the most memorable, according to HubSpot. Online video will continue to gain importance in the future. We estimate consumer Internet video will grow at a 29.0% CAGR during the period , according to our analysis of Cisco data. Companies are investing in online video marketing and shoppable video to capitalize on the growth of online video traffic. In the US, companies invested $135 billion on digital video in 2017, according to Magisto. Companies offering shoppable video technology to brands include Smartzer, Wirewax, Cinematique and Vue.ai. Our interview with Karoline Gross, Founder and CEO of Smartzer, confirmed the strong potential for further expansion of the shoppable video market and the growing importance of the technology as a marketing tool for brands. 6

7 Deborah Weinswig, CPA Managing Director FGRT New York: Hong Kong: China: Filippo Battaini Research Associate Hong Kong: 2nd Floor, Hong Kong Spinners Industrial Building Phase 1&2 800 Cheung Sha Wan Road, Kowloon Hong Kong Tel: London: Marylebone Road London, NW1 6JQ United Kingdom New York: 1359 Broadway, 18th Floor New York, NY Tel: FGRT.com 7