Case Study: Video Publishing to Drive Sales (PART II)

June 13, 2009 No comments

You’ll recall part 1 of my interview with Gordon Magee of Drs. Foster Smith. I’m back to continue learning of his strategic, long-term approach to using video to drive multi-channel sales — and answering your specfic cost questions. After reading part 1 a good number of you wrote to me privately expressing hunger for information on cost. Gordon didn’t get into the specific cost numbers with me but I can share some of his early struggles and “production / cost migration path” with you. I wasn’t planning on it so thanks for asking. I need to know what YOU need to know so keep comments coming please.

I’ll return to the overall measurement and “user generated content” (use of video supplied by customers) questions in a few days.

Let’s first start by understanding the company’s multi-channel approach to advertising…

Gordon Magee: “This past year we decided we would go into television in a larger way. The owners decided to work on a broader campaign strategy for advertising. We have always done print media and that kind of thing as well but we kind of bundled print media and radio advertising. We haven’t done a lot of radio, but television as well.

So we created a television program. Then about a year ago or so I put in a proposal for us to get video on our website and create our own video studio. That got approved and we started building the studio this fall.”

It may be helpful for you to compare this kind of environment to your own when considering approaching cost and budgeting for ecommerce-focused video. Next, Gordon shared the evolution of his company’s approach to Web video — specific to how they decided to build (invest internally) rather than lease (outsource). It’s interesting to note that they were already “in video” by creating TV ads.

Gordon Magee: “We outsource in the sense that we use the production company, one in Los Angeles, one in the Twin Cities when we made the last, more recent commercials. We have used a California production company in the past. But the internal decision to create the video studio was definitely Web related as opposed to TV commercial related.

So they really were separate entities in terms of the business case. I think with the advent of higher speed Internet connections for most people these days – there are a smaller and smaller number that are still on dial-up – and then the infrastructure capabilities that the Internet has that’s going to make video just very, very common, even more so than it is now.

It seemed to be that it was the right thing to do. Our company’s ethos, Jeff has always been to do things internally and develop the expertise internally so that we are not dependent on outside sourcing whenever that’s possible. Because we are a catalog company and have essentially a pretty huge creative department, doing our own photography and that kind of thing forever since the advent of the company, the idea to move into video wasn’t a hard decision.”

So as it turns out Gordon’s approach was driven by the company’s traditional, long-standing belief in “owning” the creative production process and a realization that the distribution channel (the Web) WAS going to explode opportunity.

Gordon Magee: “Script development of course was helped greatly by our creative department who wrote script and art direction terms and then we tweaked those. So we had the internal expertise to try it and not be afraid to do it. So we just decided that we were going to go ahead with that.

I think it (the decision to outsource versus build your own competency) really has to do with people’s expectations. As you know, being in the Internet business, expectations on the Internet continue to rise for the consumer. I think the average consumer probably doesn’t realize the effort that goes into making a website very easy for people to use and all of the other things that are on there, ancillary things like video and articles and so on.

But I think with those expectations arising, we know that video is going to be huge. And certainly with things like YouTube and other sites like that, people are going to those sites. We wanted to be part of that for the educational side of the company.”

Yet there’s more to the company’s history that plays into it’s decision to invest in a PUBLISHING company within their direct response/ecommerce selling infrastructure…

Gordon Magee: “When the company started 25 years ago – this is our 25th anniversary literally this year – when they started we were owned by two veterinarians, Dr. Ray Foster and Dr. Marty Smith. When the company started, one of the things they wanted to do was educate pet owners to be able to use products better and to care well for their pet. That came out of their veterinary background.

Certainly that’s a good marketing strategy as well. But the primary thing was let’s make sure pet owners know what they are doing. They can make better buying decisions and so on.

When they started their catalog they went to catalog conferences. They were new at all this. The catalog experts said, ‘You know you guys are devoting way too much space to education in your catalog. You can’t do that on a square inch analysis basis and have it come out in a cost-effective way.’

They decided very early on to ignore that advice. They dedicated I think 10 to 15% of every catalog to educational articles. That really became our niche for the customer. It also provided a good marketing tool in that people kept the catalogs because the articles were in them.

Over time, that trust relationship developed with the customer. So we probably have more articles on pet care and more veterinary articles online than anybody in the country. So to go into video and do the same thing was just a natural outgrowth of what we have been doing for 25 years really.”

Like many pioneers, the founders were told “don’t do THAT!” when it came to innovating. Much like Buy.com cut against the grain with its approach (proven successful by now?!) to mixing “media company” with “lowest price e-commerce company.”

What say you, Revenews readers? I hope this may help clear up questions regarding costs and how to approach them in strategic terms. I’ll return shortly to wrap up with final thoughts on Gordon’s measurement approach and use of user generated video content.