Viral Video is pretty hot now. There are some very interesting things going on with video over the internet and I’m nor on a limb here to say that the TV and Internet will completely merge within the next three to five years. The opportunity here is to create compelling video content that garners an audience AND drives a business goal. That last bit is lost on a lot of campaigns I’ve seen.

Let’s start with the facts:

• If you’re online you’re watching videos
• If your watching videos your watching them on YouTube (there are some compelling other online video networks like Hulu and Revolution3 that have an audience, but the masses are on YouTube)

To check out what is hot right now check out:

http://www.viralvideochart.com/

We should break up online video into two buckets. Video has become a very efficient tool to communicate product information. You see it everywhere from Amazon to Walmart. Most manufactures should ,if they don’t already, have videos on their site. I’ve been producing product demo and usage videos for the last couple years and they have been extremely valuable in communicating product features and benefits. The best aspect of video is how easy it is to distribute the videos through partner sites, video sites like YouTube, blogs, and other channels. I’d say video content on the web is the future of the web.

The second bucket is what is meant by “Viral Video”. It is a video specifically produced to generate a grass roots viral pass along frenzy. Think of the last video your buddy sent to you with “You got to see this”. Thats viral video. It has its place and can be a valuable communication tool. New product introduction, brand personality positioning, and awareness are some objectives that can be achieved with viral video.

A couple thoughts:

• The more outrageous and funny the video is the more viral it will be. So this is not for everyone, every product, or every legal department.
• Videos don’t become viral unless people see it. I call this “critical mass”. To make sure your video becomes viral you’ll need to invest some seed money to get to critical mass — a point where grass roots pass along takes over. So make sure you budget for the video production AND the ad buy.
• This is completely hit or miss and they don’t last long. A successful viral video campaign will get between 100,000 and 1,000,000 views — but those views will all be seen within a couple days. Something better is always just around the corner to become the next hot video.
• Be mindful of the target audience. Do you sell product to people that pass along outrageously funny videos to each other? If not, think about another tactic.

Like I said before, Viral Video has it’s place. But it has to be the right objective, with the right brand, and there is a lot of luck to make it successful.

The reason why Google has a market cap of $100B is because the type of advertising Google sells can be measured directly to sales or sales leads. That ROI measurement comes at a premium!

You can easily create a Paid Search campaign through Google Adwords. Google provides a lot of great tools to get you started and buying ads. You buy ads by bidding on the key word. For example, you can bid $3.00 per click for the key word “Insurance”. Whenever someone searches Google (or other sites — see “Contextual” post) on the term “insurance” your ad will be displayed. If that ad gets clicked on it costs you $3.00.

By bidding a specific dollar amount you are trying to get the best possible position (most optimal position — not necessarily the top spot) in the Google return results. The position your ad gets is determined by the amount you are willing to pay per click AND the historic click through rate for that ad. For example:

Company 1 is willing to pay $3 per click for the keyword “insurance”. Over time Company 1’s ad gets a Click Through Rate (CTR) of 0.75%.

Company 2 is wiling to pay $3.50 per click for the keyword “insurance”. Over time Company 2’s ad gets a Click Through Rate (CTR) of 0.5%.

Google will put Company 1s ad above Company 2s ad even though Company 2 is paying more per click.

There are a couple other odd things about how you buy Google key words — I recommend you check out the many only resources and SEM agencies for more details. The point is, you know exactly what you are paying to get a visitor to your web site. From there you should know your web sites conversion rate. Armed with this data you can manage your key word buys to only be paying for terms that return a positive on your investment. Keep in mind, companies activity pursuing Paid Search manage hundreds to thousands of key words.

Buying keywords can get very expensive. At the time of this post the key word “insurance” is going for between $2.88 and $4.35 per click. The Google estimator predicts I would get around 30,000 clicks and it would cost me over $100,000 per day! But remember — the beauty of Paid Search is that you manage the results. If those clicks don’t turn into buyers you move onto new key words, offers, or landing pages.

I’ve had some success buying key words — a couple insights:

1. It doesn’t scale. You’ll find a mix of key words, offers, and bid amounts that provide a positive return. There is a limited amount of words that will work for you and a limited amount of visitors from those key words. Once you find what works for you simple adding new words doesn’t grow your sales.

2. Branded words perform. If you’re Pepsi Cola and buy key words with “Pepsi” in the phase those buys will provide a positive return. But would you have gotten those sales anyway from the natural search returns? When you use an agency to do your keyword buying make sure they report to you the return on branded keywords vs. non-branded words (in this example the term “Soda” is non-branded since it does not include “Pepsi”). Agencies hide the effectiveness of the overall campaign by buying heavily on branded words and then telling you how successful they have been in converting sales.

3. It’s a lot of hard work. Managing the keywords, bids, offers, landing pages, creative is a lot of work. It needs an educated dedicated resource to do it right. And keep in mind the sales funnel — you have to milk every lead. It’s not just click on buy. It’s about exposures to offer, value of offer, timing, trust, and building a relationship. The goal of a consumers first exposure to your offer is not to get them to buy — walk them through the sales funnel. Search is a tool to help you get that first impression.

SEM, CPC. Search Engine Marketing

When you buy key words through Google Adwords you can choose if your ads get displayed outside of the traditional Google search results. If you choose for you ads to display beyond the Google results they will be displayed on web sites that are part of the Google Adsense network.

In this example, ads from Google’s Adwords are displayed on CNN.com.

Anyone with a website can sign up to be a part of the Google Adsense network. And I mean anyone — and everyone trying to make a couple bucks off their web site does. That means your ads could show up on “junk” sites that don’t convert into paying customers.

SEM, CPC, Google Ad words, Paid Search

Google currently commands over 70% of all search done on the internet — so we’ll focus on the SEM opportunities Google offers.

When you “Google” the web page returns a bunch of links that the Google spider found on the web. It also returns a top link and a column of links along the right side. These are paid search results.

Anyone can buy keywords that return their advertisement in the Google results through Google Adwords.

Prices vary depending on the following:

• Type of display units. Standard banner ads will be less expensive than rich media ads.
• Quality of the content. The more targeted the audience of the web site the ads will be displayed on the higher the price.
• Placement of the ads on the site. If the ads are to be displayed on specific pages they will be more expensive then Run of Site (ROS) ad buys. ROS is where the ads will be displayed through out the entire site. Example: Ads on Yahoo’s home page cost hundreds of thousand of dollars per day. Whereas banners that run ROS throughout Yahoo can go for as low as a couple bucks per 1000 units (CPM)

For “junk” traffic (junk defined as not very targeted advertisements) you can pay between $0.25 to $1.00 CPM.

More targeted traffic will cost anywhere between $3 to $15 CPM (as of mid 2008 — prices are changing for the lower now due to the economy).

Current click through rates for display ads are about 0.3% at the time of this post.

The pricing here is for directional purposes only. The real test is to determine how valuable a media exposure is to you then back into the cost you’d pay for the impressions. For example, if a sale is worth $10 to you and you expect to close 1% of consumers exposed to your advertisements then:

100,000 Ads * 0.3% Click Through Rate (CTR) = 300 consumers to your web site * 1% conversion rate = 3 sales for each 100,000 banner impressions. Those 3 consumers made you $30. So your break-even CPM is $0.30.