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Flawed analysis of statistics on web video conversion rates

Web video’s meteoric rise

Web analytics firm, KissMetrics.com today blogged about the success of video in converting web traffic into buyers, based on data collected by the Austin-based video company, Invodo.

KissAnalytics wrote, “The great thing about online video is that people vastly prefer watching over reading (just consider the last time you watched the news versus reading a newspaper!) It spans nearly every industry and demographic. Organizational housewares e-tailer StacksAndStacks.com reported that visitors were 144% more likely to purchase after seeing a product video than those who did not.”

Without a doubt, web video is increasingly popular, with an average of 200 billion video views per month now and rising, and the time spent watching video is simply skyrocketing. Consumers want video, they crave it, they are coming to expect it, we offer no argument there.

Invodo cites MediaPost, noting “product videos play a key role in consumer purchase decisions, citing a 9x increase in retail video views at the start of the 2011 holiday season.” That is an amazing jump in video views and is quite impressive.

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Where the argument gets sticky

Any seasoned marketer will tell you that increased foot traffic does not always mean increased sales – the pricing could be wrong, the packaging or presentation might be off, or the wrong demographic targeted, leading to stagnant sales regardless of traffic. Additionally, increased sales does not imply increased foot traffic. The two are linked, but are relatively independent while depending on a variety of factors.

The argument is being floated around blogs nationwide, not just at KissMetrics that somehow increased traffic or sales implies that people prefer video over reading or that increased video views means rising sales, and it is simply not proven by the statistics quoted. A retailer noting that visitors that watch a product video are more likely to buy is not necessarily true either, as the analysis does not take buyer intent into consideration – it is possible that what is equally likely is that buyers that intend on purchasing at the outset are more likely to watch a product video to affirm their decision.

The analysis that web views and sales rising is akin to saying a retailer has doubled foot traffic in January (likely because of an ad they ran in the PennySaver) and sales rose (likely because they dropped their prices by half). There are too many variables to simply decide that a rise in video views or sales means consumers prefer to watch video or that they are basing their decision on video – it is just as likely that they are affirming their decisions based on video.

What the data does prove is that the number of web video views are skyrocketing which shows a consumer demand for video, without a doubt. The data also proves that web sales are on the rise (which may or may not be linked to video viewing as buyer intent is unclear), as they are every year as online shopping has become mainstream.

More studies of the growing video industry will prove one way or the other in coming years – the current analysis may or may not be a misinterpretation of a complex set of numbers.

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Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

33 Comments

33 Comments

  1. Russ Somers

    January 17, 2012 at 12:37 am

    Lani, thanks for creating an opportunity for everybody to better understand this. It's a high-interest topic so a lot of stats are put out there. Sounds to me like unrelated stats in the same post are being mistakenly read as though they're supposed to be related. "Sales are rising because video views are rising" isn't the Stacks and Stacks story – or the story of our many other clients who see benefits from video – at all.

    You're right that the difference in purchase behavior between video viewers and non-viewers doesn't prove causality – but it is a strong correlation and consistently seen across our client base. An interesting side note is that the correlation increases when the data is multisession. That makes sense when you consider a research-intensive purchase like a laptop or a smartphone. Viewed that way, single-session data on a purchase likely to involve any amount of research may in fact be understated.

    The online retailer has an advantage over the offline retailer running both the Pennysaver ad and the sale. Online retailers can, by A/B testing, control out intervening variables. When our clients have done this, they've confirmed conversion lift from video.

    The interesting thing to me is that conversion lift is not always the biggest decision driver for the retailers and brands we do business with. Site experience is hugely important to them, as are user engagement and SEO.

    FYI, at the start of February we'll release some research done in conjunction with the e-tailing group. It's designed to directly understand how consumers engage with video in shopping contexts. From what I've seen of the numbers so far, it'll contradict some conventional wisdom – looking forward to getting it out.

    Thanks again for raising the issue!

  2. Andrew Mooers

    January 20, 2012 at 8:27 pm

    The flavors offered are not just vanilla and chocolate any more. And the delivery methods of the media streams need to be varied. In the mode the real estate buyer and seller want, expect. Reach, frequency and impresssions. It all boils down to for ever hundred impressions, a desire result happens. It is a numbers game. And also, just because a set of eye balls and ear drums sampling today's local area or real estate are not called in to action does not mean that you don't need to build, feed that video channel for when they are ready to act.Video works, is more memorable and quickly uses two or more senses to connect, engage your audience. Give them some video they can relate to. On a regular basis to develop the habit. Get the results hitting the target.

  3. Carbonless

    January 23, 2012 at 8:14 am

    It's just another in a line of "quick fixes". Everyone should have a blog, everyone should add social media, everyone should add video.

    No – no – no!

    First, get clear about your market, their problems, your message, your brand, your offerings, your benefits…

    Then, if video is the right way to deliver that message, use it. If it's flyers, if it's direct mail, if it's email, if it's banner ads, use them.

    There is NO shortcut.

  4. Ruthmarie

    January 23, 2012 at 9:55 pm

    This is an interesting discussion. I sometimes try to put myself in the publics shoes by examining my own preferences. If it is a high-ticket item, I'm going to want to have some reading material, charts, graphs and information I can LOOK AT and analyze in my own good time. Video won't do that. Now since, I'm a real estate agent, that's important. This isn't an iPod, its a major purchase.

    The other thing is that as people flood into video….it will become less unique. So some of the advantage it may have had will be neutralized.

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