Business Goes Straight to Video

A growing number of companies turn to online video, and the word of mouth that accompanies it, for everything from advertising to recruiting

by Rachael King

Blendtec Chief Executive Tom Dickson had an unorthodox method for testing his company's blenders: He used them to pulverize two-by-fours. His marketing director, George Wright, decided to videotape the exploits, adding other objects, from marbles to rake handles. Then they posted the clips to the Web.

The rest, as they say, is marketing history. Starting with an initial investment of about $50 for supplies, the pair since November has created and posted more than 25 low-budget videos, fielding hundreds of requests to grind up everything from an Apple (AAPL) iPod to a grandmother's false teeth. Dickson even appeared on the Today Show, where he pureed an entire rotisserie chicken, bones and all, with a can of Coke.

"Really our whole intent is brand awareness and market awareness," says Blendtec's Wright. "People will remember that there's a blender that will blend marbles if their blender isn't blending ice very well." He says Blendtec videos have been viewed more than 17 million times.

Cheaper by the Million

Dickson and Wright owe their newfound fame to the power of online video, which is exploding along with the proliferation of high-speed Internet connections and the growing popularity of video-sharing Web sites like Google's (GOOG) YouTube. The number of U.S. video viewers is expected to surge to 157 million in 2010, from 107.7 million in 2006, according to eMarketer. The consulting firm estimates that more than one-third of the U.S. population, aged 3 and older, viewed videos on the Internet at least once a month in 2006.

Numbers like that aren't lost on Madison Avenue. Major brands such as Coca-Cola (KO), Diageo's (DEO) Smirnoff, and Unilever's (UL) Dove are creating online video campaigns that rely on word of mouth, often generating millions of views—for far less than it costs to place ads on TV (see BusinessWeek.com, 7/23/06, "Raising the Bar on Viral Web Ads").

Corporations are using Web-based video in other ways, too. Tech companies such as IBM (IBM) and Microsoft (MSFT) use customer testimonial videos in pitches to prospective clients.

Enterprise Rent-A-Car, Google, and Nordstrom (JWN) post videos on their Web sites to help recruit new workers. Corporate bloggers are experimenting with video to give audiences behind-the-scenes glimpses of the inner workings of companies like Microsoft, while companies such as Deloitte and American Express (AXP) use video to enhance training.

Calculated Risks

One of the most common uses for online video is as a low-priced marketing tool. PepsiCo's (PEP) Frito-Lay unit is harnessing the homemade video craze to promote its Doritos brand at this year's Super Bowl. Frito-Lay will award $10,000 and a trip to Miami for a Super Bowl viewing party to each of the five finalists in a competition to produce the best homemade commercial.

It's a risky move, considering that other companies can spend as much as $2 million producing a Super Bowl ad and millions more for air time. "We talked about the risks but we also understood that if you want big rewards you have to take big risks," says Ann Mukherjee, vice-president for marketing at Frito-Lay.

But the risks are calculated. According to a recent survey conducted by Burst Media, an online media and technology company, 56.3% of online video viewers recall seeing advertisements in content they have watched.