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Flawed analysis of statistics on web video conversion rates

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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.

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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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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Business Marketing

Snapchat’s study reveals our growing reliance on video

(BUSINESS MARKETING) Snapchat released a report that shows some useful insights for future video content creation.

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Snapchat's video

Snapchat is taking a break from restoring people’s streaks to publish a report on mobile video access; according to Social Media Today, the report holds potentially vital information about how customers use their mobile devices to view content.

And–surprise, surprise–it turns out we’re using our phones to consume a lot more media than we did six years ago.

The obvious takeaways from this study are listed all over the place, and not even necessarily courtesy of Snapchat. People are using their phones substantially more often than they have in the past five years, and with everyone staying home, it’s reasonable to expect more engagement and more overall screen time.

However, there are a couple of insights that stand out from Snapchat’s study.

Firstly, the “Stories” feature that you see just about everywhere now is considered one of the most popular–and, thus, most lucrative–forms of video content. 82 percent of Snapchat users in the study said that they watched at least one Snapchat Story every day, with the majority of stories being under ten minutes.

This is a stark contrast to the 52 percent of those polled who said they watched a TV show each day and the 49 percent who said they consumed some “premium” style of short-form video (e.g., YouTube). You’ll notice that this flies in the face of some schools of thought regarding content creation on larger platforms like YouTube or Instagram.

Equally as important is Snapchat’s “personal” factor, which is the intimate, one-on-one-ish atmosphere cultivated by Snapchat features. Per Snapchat’s report, this is the prime component in helping an engaging video achieve the other two pillars of success: making it relatable and worthy of sharing.

Those three pillars–being personal, relatable, and share-worthy–are the components of any successful “short-form” video, Snapchat says.

Snapchat also reported that of the users polled, the majority claimed Snapchat made them feel more connected to their fellow users than comparable social media sites (e.g., Instagram or Facebook). Perhaps unsurprisingly, the next-closest social media platform vis-a-vis interpersonal connection was TikTok–something for which you can probably see the nexus to Snapchat.

We know phone use is increasing, and we know that distanced forms of social expression were popular even before a pandemic floored the world; however, this report demonstrates a paradigm shift in content creation that you’d have to be nuts not to check out for yourself.

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Business Marketing

Technology is helping small businesses adapt and stay afloat

(BUSINESS MARKETING) Small businesses need to utilize digital platforms to adapt their businesses during COVID-19, or else they may be left behind.

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small businesses new tech

While many may not have imagined our present day back in March, and to what extreme we would be doing things “remotely” and via “hands-free contact”, we have to give some credit to small business owners who remain flexible and have pivoted to stay afloat. They deserve major credit on adaptations they have made (and possibly investments) in new technology (ordering online, online payments) especially at a time when their in-person revenues have taken a hit.

There are various marketing buzz words being used lately to say “let’s keep our distance”, including: curbside, to-go, hands-free, no contact, delivery only, order via app, social distancing and #wearamask.

The thing is, if you really think about it, small businesses are always in evolution mode – they have to pay attention to consumer consumption and behaviors that can shift quickly in order to stay relevant and utilize their marketing and advertising budgets wisely. They heavily rely on positive customer reviews and word of mouth recommendations because they may not have the budget for large scale efforts.

For example, we use Lyft or Uber vs calling an individual cab owner; we order on Amazon vs shopping at a local mom-and-pop shop; we download and make playlists of music vs going to a record or music store. Small business owners are constantly fighting to keep up with the big guys and have to take into account how their product/service has relevance, and if it’s easy for people to attain. In current times, they’ve had to place major efforts into contactless experiences that often require utilizing a digital platform.

If stores or restaurants didn’t already have an online ordering platform, they had to implement one. Many may have already had a way to order online but once they were forced to close their dining areas, they had to figure out how to collect payments safely upon pickup; this may have required them to implement a new system. Many restaurants also had to restructure pick up and to-go orders, whether it was adding additional signage or reconfiguring their pick up space to make sure people were able to easily practice social distancing.

According to this article from the U.S. Chamber of Commerce, “Studies have shown that 73% of small businesses are not aware of digital resources, such as online payment processing tools, online productivity tools, e-commerce websites, online marketing and other tools, that can help them reach customers around the world. If small businesses had better access to global markets, it could increase the GDP of the United States by $81 billion and add 900,000 new jobs. During the pandemic, this could also mean the difference between thriving and closing for good.”

There are some larger corporate technology companies offering ways to support small businesses whether it’s through small business grants from Google, resources and grants from Facebook or Verizon giving them a break on their telecom bill. The challenge with this may be whether or not small business owners are able to find time from their intense focus on surviving to applying for these grants and managing all that admin time. Many business owners may be focusing on what technology they have and can upgrade, or what they need to implement – most likely while seeing a loss in revenue. So, it can be a tough decision to make new technology investments.

It does seem like many have made incredible strides, and quickly (which is impressive), to still offer their products and services to customers – whether it’s a contactless pay method, free delivery, or even reservations to ensure limited capacity and socially distanced visits. There are still some that just haven’t able to do that yet, and may be looking at other ways to take their business to a wider audience online.

We would encourage, if you can, to support small businesses in your community as often as you can. Understandably there are times that it’s easier to order on Amazon, but if there is a way you can pick up something from a local brewery or family-owned business, this may be the lifeline they need to survive and/or to invest in new technology to help them adapt.

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Business Marketing

There’s a shortage of skilled workers, so get learning

(BUSINESS MARKETING) COVID-19 may end up justifying training funds for lower-class workers to learn new skills. Skilled workers are desperately needed right now.

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skilled worker

The COVID-19 pandemic (yes, that one) has ushered in a lot of unexpected changes, one of the which is most surprising: An increased call for skilled workers — a call that, unfortunately, requires a massive retraining of the existing workforce.

According to the New York Times, nearly 50 percent of Americans were working from home by May; this was, reportedly, a 15 percent increase in remote work. The problems with this model are expansive, but one of the greatest issues stems from the lack of training: As employees of lower-class employment transitioned to working online, it became increasingly evident that there was a shortage of skilled workers in this country.

The Times traces this phenomenon back to the Great Recession; Harvard University’s Lawrence Katz points to some parallels and insinuates that this is an opportunity to elevate the lower class rather than regressing, and it seems fair to put the onus of such elevation on lawmakers and senators.

Indeed, Congress has even addressed the issue of skill equality via “bipartisan support” of a $4000 credit for non-skilled workers to use toward skill training. For Congress to come together on something like this is relatively noteworthy, and it’s hard to disagree with the premise that, given the invariable automation wave, many of our “non-skilled” workers will face unemployment without substantial aid.

COVID-19 has accelerated many trends and processes that should have taken years to propagate, and this is clearly one of them.

Supporting laborers in developing skills that help them work within the technology bubble isn’t just a good idea–it’s imperative, both morally and economically speaking. Even middle-class “skilled” workers have had trouble keeping up with the sheer amount of automation and technology-based skillsets required to stay competent; when one considers how lower-class employees will be impacted by this wave, the outcome is too dark to entertain.

It should be noted that non-skilled workers don’t necessarily have to scale up their training in their current fields; the Times references a truck driver who pivoted hard into software development, and while it may be easier for some to focus on their existing areas of expertise, the option to make a career change does exist.

If we take nothing else away from the time we’ve spent in quarantine, we should remember that skilled labor is integral to our success as a society, and we have a moral obligation to help those who missed the opportunity to develop such skills fulfill that need.

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