We believe that taking that excitement and interest in online videos and applying it in the world of e-commerce for both products and services is the next evolution of online word of mouth. Video reviews by ordinary people putting the products they purchased to use, for example, will most certainly increase brand awareness, influence the purchasing decisions of other shoppers, and drive higher site traffic and sales conversion. This is especially true for products and services that are a natural fit for demonstration or evaluation, such as sporting equipment, home improvement, pet care, apparel, foods, autos, hotels, rental properties, and many others.

Online merchants can not only leverage from user-generated video content, but should think of video reviews as mini-infomercials or product demonstrations that they can quite easily produce and promote on their website. We have a feature called “Staff Reviews” that provides our clients with the ability for their employees to create and post reviews. This is a great way to highlight the uses of a product or the benefits of a service. Bass Pro Shops, a Bazaarvoice client, is already doing a great job of using video reviews on their website and have a link on their home page entitled “Great Product Videos”. Take a look at Bass Pro Shops' videos here.

“Some retailers are already capitalizing on the explosive growth of online video, seeking to better showcase products and entertain and engage customers” – Internet Retailer, January 2007

This article explains how Blendtec, a little known manufacturer of blenders, thought it would be funny to create a video of them blending random objects (from Precious Moments figurines to hockey pucks to golf balls).  They created their first 6 viral videos for $50, posted them on YouTube, and bought the domain http://www.willitblend.com/.  To date, users have submitted over 20,000 things for them to blend up and Blendtec has experienced a 650% increase in traffic and around 10 million page views.  They sold more products in one weekend than the entirety of the best month on record.  They’ve been asked to be on The Today Show and The Tonight Show just because someone thought tossing a 2” x 2” board and some golf balls in a blender was funny. And now they’ve taken this viral marketing campaign multi-channel with demos in Costco stores.

This is a dramatic illustration of the potential impact of online video reviews and how they can be leveraged within e-commerce. Of course, many online merchants will be wary of this form of word of mouth fearing legal issues or damaging review content, but by establishing clear review submission guidelines (such as how the video should be filmed) and with Bazaarvoice providing full moderation services for all videos submitted, the opportunity cost of not leveraging from this new medium is definitely greater than the risk. After all, any videos that don’t fully comply with the submission guidelines will simply not be approved or posted.

It will be interesting to see how quickly companies seize this new opportunity and utilize it to their advantage in online reviews. The innovative ones will recognize this as the next evolution of online word of mouth …and the most powerful form yet!

Speaking of bad profits, I was especially intrigued this morning to read about my friends at 1-800-FREE-411 (Jingle Networks). TechCrunch reports that 1-800-FREE-411 has already received 100 million 411 calls! It has taken over 3% of the $8 billion 411 market. I know the CEO of this company (he founded Flycast with a fellow Wharton MBA graduate from my class), as well as their early investor Josh Kopelman, who is also an investor in Bazaarvoice and the founder of Half.com. I consider these two some of the smartest people I am fortunate enough to know. This is another stunning example of bad profits creating an incredibly huge and disruptive market opportunity. 1-800-FREE-411 has the easiest marketing slogan I have seen in a long time – everything you need to know is right there in the phone number. To learn more about what created this opportunity, check out Josh Kopelman's great blog post.

There are so many recent examples of bad profits in action. Think of the incredibly disruptive Skype, which yesterday had over 8 million users online. The negative word-of-mouth from exorbitant long distance fees paved the way for Skype's success. And, of course, everyone knows by now that eBay bought them for $2.6 billion.

Where are the bad profits in your industry and how can you capitalize on them?

Do you have any bad profits yourself? One example I can think of in retail is the difficulty of returns when you have a bad experience with a product. Costco capitalizes on that by providing unlimited returns on all items (i.e. buy a TV, save the receipt, and you can literally return it 2 years later if it breaks). Their only exception is for computers – there is a 6-month policy on those. I have been tracking Costco's success for years to see if this incredibly customer-friendly policy would hurt them. Quite to the contrary, Costco has thrived as a result. I encourage you to read my friend Gary Stein's blog for more analysis on Costco.

If you are a Bazaarvoice client, we suggest you measure your word-of-mouth promoters and detractors with our Net Promoter service. We haven't promoted it as well as we should (we'll change that), but it is truly powerful and will illuminate any potential sources of "bad profits" and word-of-mouth detractors.

And now enjoy the free 411 calls!