Contagious Commercials

How to get in on the YouTube craze.

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One day in June, MerlynDHZ shot a digital video of himself and his buddies flying down ramps, gliding across railings, and doing other skateboardlike stunts in their Heelys, sneakers with retractable wheels hidden in the soles. The next day, he uploaded the clip onto the video-sharing website YouTube. Within a month, more than 2,000 people had viewed the 90-second snippet. A few fans even linked to it on their personal MySpace homepages.

What MerlynDHZ's fans may not know is that he and the other skaters in the video work for Heeling Sports Limited, the Carrollton, Texas, company that makes Heelys. Heeling Sports is one of a growing number of businesses seeding YouTube with short videos to generate buzz on the cheap. The homemade quality of the clips appeals to young consumers who are constantly bombarded with ads, says Brooks Radighieri, Heeling Sports' marketing manager. "It has more validity if it doesn't look like a corporate-sponsored video," she says. "Kids are sharp--they know when you're trying to sell them something."

So-called video viral marketing has exploded over the past year, thanks to increased broadband capacity and sites like YouTube, which make it easy to upload and share videos online. Indeed, seven out of 10 Internet users have watched an online video, and 30 percent of those people have shared one with friends, usually via e-mail, according to a survey by the Online Publishers Association, a research group in New York City. "Videos seem to have replaced the jokes in my in box," says Stefan Tornquist, research director at MarketingSherpa, a research firm in Warren, Rhode Island. The same study shows that viral videos translate into sales. Sixty-six percent of the people who watch videos online have seen an ad clip. About one-third of those viewers visited the marketer's website, and 8 percent made a purchase.

A lot of that is thanks to YouTube, the dominant player in a category that includes Google (NASDAQ:GOOG) Video and AOL (NYSE:TWX). Every day, people watch more than 100 million videos on YouTube and upload 65,000 new clips. Many videos are posted by amateurs playing around with camcorders in their backyards, but sprinkled in are Hollywood movie trailers--and clips created by companies eager to capitalize on the craze.

Amid such clutter, it's easy to get lost. The funnier or more creative the spot, the better, Tornquist says. To build buzz for its new iced-tea malt beverage, for example, Smirnoff posted a two-minute parody of a rap video that featured country-club prepsters rapping about finger sandwiches, croquet, and, of course, Smirnoff Raw Tea. Within a few weeks, more than one million people watched the "Tea Partay" video. "You can't be a classic brand manager, worried about having the right words," Tornquist says. "The companies that are going to benefit will be the ones willing to stick their neck out."

Even then, there are no guarantees. Case in point: Robert Alvin, founder and CEO of online swap shop BarterBee.com, who donned a bee suit to kick off an online video contest this summer. Contestants shot 60-second films with bee motifs and submitted them to BarterBee.com, which reviewed the clips for questionable content before posting them on YouTube. BarterBee offered flashy prizes, including a 42-inch plasma television, and sent e-mail blasts to registered members of its site. In the end, though, only 30 videos were submitted, including the grand prize winner, which featured a man in a bee costume skateboarding through suburbia to deliver a BarterBee package. Still, considering that the campaign cost less than $10,000--"We didn't make the creative and we didn't host the videos," he says--Alvin may try again next year. For one thing, he adds, the clips still have legs on YouTube: One entry that spoofs the Mac vs. PC commercials has been viewed almost 5,000 times since August.

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