Gauging online video's revenue potential in the SMB space

J.R. Becko, director of sales for online video platform Ooyala, said he's seeing a considerable amount of growth in this sector, and he said the company's revenue from small businesses is growing about 30 percent month over month. He says the company sees about a quarter of its total revenue from small businesses. 

"These small businesses are going to be growth engines, and our relationships today set the stage for their future expansion in traffic," Becko said. "We are publishing best practices, and if they should see success with online video, we are having discussions about how we can provide a roadmap for them to scale up."

Becko said Ooyala keeps costs down for small businesses by providing all they need to deploy and monitor video, and to help small businesses grow and make informed decisions regarding their video campaigns.

Fliqz CEO Benjamin Wayne said it is important to differentiate when prospecting between those companies that are ready to make an online video offering purchase, and those that are merely considering an eventual deployment.

"You have to separate the shoppers from the buyers," Wayne said. "If you talk to any VP of marketing, everyone is interested in talking about video, but are they poised to buy a video solution?"

Wayne said balancing the inbound and outbound sales efforts was key to addressing this concern. He said as long as account opportunities were addressed by priority so that customer acquisition doesn't become prohibitively expensive, then the margins for providing online video to small business clients were attractive.

Brightcove's Whatcott agreed that the margins in the space are attractive, as the sales cycle is shorter and expense per client is much lower, offsetting the lower average transaction size.

"I think this market has huge potential, based on the modeling we've done on it," Whatcott said, though he declined to discuss specific market size. "We looked at it (the SMB market) broadly; we looked at the company profiles, the current video penetration, what is the percentage of companies that find the free video solutions acceptable versus insufficient, and other factors. Then we applied the percentages and the numbers were exciting. We think pretty much every business website is going to want video going forward."

None of the executives interviewed for this article could pinpoint a specific vertical or set of verticals that lead the way in SMB online video deployments, instead asserting that interest and sales remained strong for all sorts of business segments. Strong growth across fields as diverse as healthcare, finance, retail, e-commerce, and even pets makes the space look more and more like a growth engine for the companies that target the SMB market.

PixelFish CEO John McIntyre probably summed up the opportunity the best.

"Online video levels the playing field for these businesses," he said "Two to three years from now, I think they'll wonder how they got along without it."