Toyota Makes a Sharp Turn on the Web

Source: http://online.wsj.com

Saatchi, YouTube Avoid
The Standard Offerings
In Ads for Car Maker

By EMILY STEEL
March 7, 2008; Page B3

Toyota Motor’s new comedy-themed marketing campaign for its 2009 Corolla sedan, to be rolled out on YouTube next week, is as much of a gamble for the video Web site as it is for the auto maker.

While online marketing is growing at a rapid clip, ad revenue for some of the biggest social-media sites such as YouTube and Facebook have failed to meet the sites’ own forecasts. Part of the problem is that while they have become a hit with consumers by featuring content that is particularly interactive, they often continue to push advertising options that are far more static — like banner or video ads on the home page.

‘SKETCHIES’

See the Toyota-sponsored sketch-comedy contest site.

Marketers increasingly are interested in building games or contests, creating special sections on sites or even producing their own Web TV series. Those campaigns, however, typically require too much labor for what is often a niche promotion.

The Toyota campaign is an attempt by YouTube to address that. When it first met with the car maker about running a campaign for the Corolla, Toyota rejected the standard offerings, saying it wanted something users could participate in rather than just view. “If you just bombard these sites with traditional advertising, you are going to turn off the customers, and that is not what any of us want to do,” says Kim McCullough, Toyota’s corporate manager for marketing communications.

YouTube, which is owned by Google, agreed to customize an alternative. This winter, teams from the Web site were in the offices of Saatchi & Saatchi LA, the ad agency, almost every day to touch base on the campaign. The YouTube side has overseen the technology piece of the campaign, while the Saatchi people have handled the creative component. Saatchi is a unit of Publicis Groupe.

The result is one of the most intricate and expensive campaigns ever on YouTube; Toyota is paying about $4 million for it, according to a person familiar with the campaign. Its main feature is a new destination on the site, dubbed “Best in Jest,” that has been designed for Toyota. Special algorithms created by YouTube find up-and-coming comedy videos on the site each week and feature them in that space. Toyota also is sponsoring a sketch-comedy contest on the site called “Sketchies,” where users can post funny videos with the chance to win as much as $25,000.

Sites such as YouTube — whose 66.2 million unique U.S. visitors in January, according to Nielsen Online, make it the top video site — see personalized marketing campaigns as the key to getting big companies excited about advertising with online video. Online video service Hulu, a joint venture between General Electric‘s NBC Universal and News Corp.‘s Fox unit, and VideoEgg, a San Francisco company that runs an online-video network and develops interactive-video ad technology, have also hired their own teams to develop and produce ads for marketers. News Corp. owns MySpace as well as Dow Jones & Co, publisher of The Wall Street Journal.

One drawback to Toyota-style campaigns, analysts and the sites agree, is that because they require so much time and manpower, they aren’t the most effective way to generate revenue. A better model, they say, would be to offer a basket of interactive marketing options that can be individualized but also easily replicated.

Among other things, Toyota is sponsoring a sketch-comedy contest called ‘Sketchies,’ where users can post funny videos.

“One of the main blockages of advertisers using video more has been an inability to plan, buy and create ads in a scalable way,” says Tim Armstrong, Google’s president of advertising and commerce.

YouTube is also beginning to address that problem. Take contests, for example, which are popular among Internet marketers these days. YouTube lets advertisers submit the different creative components, such as the idea, the prizes and the graphics and control certain functions such as the start and end dates. YouTube enters these into a contest-maker program, and out pops a custom-made contest. Currently on the site, General Mills‘s Nature Valley uses a contest to encourage users to post videos showing their favorite natural places, while Hewlett-Packard has one aimed at budding film makers.

“The contest platform is like an empty vessel for a great creative idea,” says Jamie Byrne, client solutions lead for YouTube.

Advertising on video-sharing and social-networking sites still is largely experimental for big marketers. Online video ad spending in the U.S. last year came to $775 million, or just 3.6% of the total $21.4 billion U.S. Internet ad market, according to research firm eMarketer. But forecasts call for rapid growth: ad spending on online video sites is expected to increase 74% to $1.3 billion this year.

MORE ON H&R BLOCK

• H&R Block’s community site

• Facebook page

• MySpace page

• YouTube page

One concern for these sites is that some advertisers are creating campaigns on the sites without actually paying the sites to create the content. Tax-preparation giant H&R Block is running a social-media campaign on YouTube, Facebook and MySpace, but the campaign was created by 360i, a small digital-marketing firm, and marketing firm MRM Interactive. The campaign involves games for the sites and even a profile and videos about a tax-obsessed character named Truman Greene. H&R Block simply posted the content to YouTube and Facebook just as anyone else would. One saving grace for the sites: H&R Block is buying standard banner ads on the sites to promote the new content.

“The question is, are advertisers just going to use their services for free?” says Paula Drum, vice president of marketing for H&R Block. She says the sites have to find ways to make their standard ads more valuable by using technology to better target users according to their interests.

Write to Emily Steel at emily.steel@wsj.com

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