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The Evolution of Interactive Video Marketing And Future Predictions: A Chat With COTU CEO, Richard Baugh

Video ads have come a long way—from their humble beginnings as linear television commercials to dynamic, interactive experiences. Thanks to technology, consumers have transitioned from passive viewers to active participants, creating a more direct and meaningful connection with brands. 

No wonder video is the number one media used in content marketing strategies.

With 14 years of experience in video marketing, Richard Baugh, the founder and CEO at COTU, has seen consumer video consumption soar. At the same time, he has noticed the disappointment of marketers who are reluctant to use video due to their inability to calculate a solid return on investment (ROI).

In this blog, he offers insight into video marketing and how its past and present status could influence what lies ahead. Most significantly, he clarifies how interactive video analytics can help you better understand your brand, your customers, your sales strategy, and the effectiveness of your video marketing efforts.

Table of Contents
The Evolution of Video Marketing
​​The Rise of Video Marketing
Determining ROI With Interactive Video
What Does the Future Hold?

The Evolution of Video Marketing

20th-century TV advertising shaped America’s visual environment and consumer demand. As the population’s love for TV grew, the medium became a major driving force behind consumer market growth. 

A story of innovation and creativity, the history of video marketing reveals how and why moving images have dominated the advertising landscape.

1941: The First Video for Marketing was Created

“If we go back to the beginning,” Baugh says, “when video was first created for marketing, it was advertisement-based. This was focused on high-level awareness, without much consideration given to buyer intent.”

Throwback to when the Bulova Timepiece Manufacturing Company aired the first-ever commercial in the US on a New York TV station during a Yankees game. It was viewed by about 4,000 people. The simple 10-second spot showed a ticking watch overlaid on a map of America, accompanied by a voice-over declaring, “America Runs on Bulova Time.”

It was a passive viewing experience, like someone announcing supermarket specials over a loudspeaker. Unlike today’s interactive video commercials, it had no call-to-action (CTA) or personalization.

Yet, in retrospect, this black-and-white ad was a game-changer and the precursor to today’s million-dollar Super Bowl ads. The $9 paid by Bulova to broadcast their advertisement marked the birth of commercial television.

1950s-60s: The Golden Age of TV Advertising

In the aftermath of World War II, consumerism was on the rise, leading to 85.9% of American households owning a television by 1959. This revelation was not lost on Madison Avenue ad executives, who saw the potential of using television to target the middle-class suburban family demographic.

During the 1950s, advertising agencies created television programming and commercials. For example, Procter & Gamble sponsored soap operas to advertise their products.

However, this changed in the 1960s when NBC proposed a new approach: selling ad spots to businesses during the breaks in television programs. For brands, this new model was more cost-effective than traditional sponsorship models.

​​Between 1960 and 1969, there was a 44% increase in the population of 14- to 24-year-olds. Consequently, for the first time, advertisers began to pay attention to teenagers. The Pepsi Generation campaign is an example of a successful marketing strategy targeting this demographic. It was more than just a soda ad; it promoted an entire lifestyle and attitude, much like influencers do today.

The Golden Age of advertising brought an influx of creativity to the advertising industry and more refined target markets. However, Baugh points out, “the production companies, brands, and people creating the content were paid upfront, which was great, but they had no way to track how many products were sold as a result of their video.”

Unfortunately, it was nearly impossible for advertisers and programmers to quantify a successful ROI due to technological and analytical limitations. As complex audience segmentation was unavailable at that time, campaigns were mainly based on family dynamics, such as the father as the breadwinner and the mother as the homemaker. Video analytics were even more limited, with watch time being the most valued metric.

1980s: Going “Viral”

Even in the 1980s, Baugh states that “video still lived at the top of the funnel where one could view something, become aware of it, and consider it, but they had to go elsewhere to make the purchase.” However, this decade transformed how adverts sold products. 

The question was, how do you generate buzz around a new product and convince consumers to buy it at a time when going viral did not exist?

Premiering during the Super Bowl, Apple Macintosh’s commercial ‘1984’ was the first time a commercial became an epic event that created a buzz for weeks afterward. It’s a somewhat grandiose textbook case study on how video can help build brand awareness at the top of the marketing funnel.

Directed by Ridley Scott, the commercial portrayed a dystopian society. A woman in a bright-red running suit threw a sledgehammer at a large screen that displayed a Big Brother-like figure. The commercial was intended to be a statement against conformity and the dominance of IBM in the personal computer market.

The video displayed special effects that were rarely seen on television. This opened the path for modern commercials to be more than just a lifestyle pitch—they had a cinematic appeal. While the commercial didn’t shorten the buyer’s cycle like interactive video can do today, it revolutionized production value, something we take for granted since most smartphones now shoot video in 4K.

AdAge magazine declared it the greatest commercial ever made, partly because it altered how brands interacted with the public. Commercials were no longer confined to a commercial break but were newsworthy—the 1980s equivalent of “going viral.” 

1994: The Advent of Online Advertising

It’s remarkable that, within a decade, AT&T purchased the first advertisement banner in 1994, Google was created in 1998, and in 2004 Facebook was launched. Still, the social media juggernaut took another two years to transition from a college-only network to a global social network.

In 2000, Google AdWords transformed the world of online advertising. It allowed Google to offer a search experience that could generate brand revenue without negatively affecting search results. Moreover, it allowed brands to reach specific audiences, whether through display ads and search ads, or retargeting and pay-per-click advertising.

Early internet days certainly offered better analytics than previous decades, given that marketers could monitor mouse clicks. However, much like the Golden Age of TV commercials “advertisers still couldn’t compute what people were doing as a result of interacting with their content,” explains Baugh.  

And what of video marketing? Baugh continues, “brands weren’t making video content the way they are now because websites couldn’t host videos and people didn’t have smartphones to interact with content.” 

To put it into perspective, Americans only started getting broadband (high-speed internet) in 2004, so brands were not focusing on video quite yet. At that time, the production of such content was costly and there was no centralized platform for hosting the content. 

But, that was about to change…


2005: The Launch of YouTube

In 2005, when Chad Hurley, Steve Chen, and Jawed Karim—all former PayPal employees—launched YouTube, they had no idea it would become the world’s second-largest search engine, second only to Google. Suddenly, anyone could upload, share, and search for videos online.

YouTube’s monetization incentivized creators to invest more resources into their content to improve its quality, while enticing brands to advertise to millions of viewers. For the first time, videos were created for search engine optimization and specific target audiences.

“From a consumer’s perspective,” says Baugh, “the launch of YouTube transferred the power from distributors to viewers. Now, if someone wants to watch a fishing show on a Saturday at 10:00 a.m., they can do that. It’s not like traditional TV, where viewers are limited to passively take it in; it’s content on demand.”

YouTube has transformed digital video marketing by allowing businesses to engage with customers globally. Its algorithm helps brands reach a more targeted audience by recommending content based on a user’s interests and watch histories. Currently, about 100 million people (2020) watch YouTube on TV screens and 77% of marketers (2022) publish marketing videos on the platform.

Enter—Interactive Video

Around the time YouTube became a household name, legacy brands such as Coca-Cola, Mercedes-Benz, and Old Spice began experimenting in the online video space. 

For example, instead of creating a linear narrative advertisement discussing the features of each car model, Volkswagen’s Walk Off the Earth interactive music video introduced different models in a fun, engaging way. During the ad, they enabled viewers to change the video’s musical genre to see a different car model at any point in the song. 

In recent months, Baugh has observed that automotive dealerships have come to recognize the effect interactive videos can have on customer intent and sales. This disruptive technology allows for an increased level of engagement and can collect data for deeper insight into customer preferences.  

For example, Baugh explains that “multiple trim packages are available to customers interested in buying a car. Are customers interested in features such as Bluetooth speakers or leather seats? Depending on what they select, brands can gauge what types of packages are most sought after in certain areas.”

In essence, with interactive videos, brands can A/B test their customer’s product preferences in real time. “So, it allows marketers to understand what is important to customers and then discern the drivers [no pun intended] for certain target groups so that brands know exactly what their customers want to purchase,” he concludes. 

In this way, interactive video has evolved from being a novelty to an essential part of digital marketing strategies, applicable to all products and services—not just the automotive sector. It has grown to include many rich experiences, such as the addition of interactive product overlays and clickable elements to facilitate single-session selling capabilities.

Want to Know Exactly What Your Customers Prefer to Buy?

The Rise of Converged TV 

In 2010, Sony released the first connected TV, i.e., televisions connected to the internet and capable of streaming content. Coupled with the rise of streaming services such as Netflix, connected TVs (CTVs) further shifted viewing power from brands to consumers.

According to a study by Innvoid, connected TV surpasses mobile as the channel with the greatest share of global impressions. Innvoid also found viewers generally watch more than 90% of a video on connected TV and about 77% on mobile. 

In recent years, particularly since the Covid-19 pandemic, linear TV, CTV, and over-the-top (OTT) devices, such as Chromecast, Xbox, Playstation, etc., have started to converge in the way they deliver content through apps, devices, or the web. Currently, we’re experiencing merging digital audience targeting techniques with linear TV content into one closed ecosystem—converged TV.

This is the perfect marriage of technology and consumer demand. As the number of channels to access content expands, advertisers are adapting their strategies for this new era of viewership. Google’s Advanced TV Guide has already talked about “reimagining the commercial break.”

Now, people are just as likely to view their favorite YouTube creator as they watch something on Amazon Prime, HBO, or Disney+. Converged TV offers viewers the same level of choice and control on their television sets as they are accustomed to on their tablets and phones.

If you harness the power of YouTube and converged TV, you could achieve the same reach as online and linear television combined, with added benefits. Personalized ads at scale, video sequencing to tell stories, and greater interactivity are real possibilities. 

As someone at the forefront of video marketing, Baugh thinks converged TV is a great place to use interactive video to drive awareness, consideration, and intent.

Shoppable Videos

Shoppable videos have come a long way since the early 2000s. Earlier, brands could only add a link within the captions of their videos, prompting viewers to leave the platform and view the product on their website. Such a convoluted buying experience led to high bounce rates and shopping cart abandonment.

From a conversion perspective, shoppable videos fulfill the customers’ desire to purchase products effortlessly and without disruption. Baugh explains, “This allows one to see something, learn about it, and purchase it all at once, thus shortening the buyer cycle.” 

These videos provide consumers with all the product information they need in a single interaction and proactively answer their questions. Essentially, “it ensures that the ideal personas are met on the device they use, mostly smartphones,” he adds.

A case in point: Research by Klarna revealed that the preference for mobile shopping is highest among younger generations with 48% of Millennials shopping at least once a week on their mobile devices. Interestingly, the same report found that the US is the only country where most shoppers prefer mobile devices to computers.

Modern Video Marketing

Tracing the evolution of video marketing reveals how increased internet accessibility, the proliferation of smartphones, and more affordable video production equipment have led to its rise. However, in Baugh’s experience, marketers are skeptical about investing in video marketing as brands want to make every dollar count, requiring tangible results.

Thus the question remains: is video essential?

To Baugh, it’s a solid YES. He explains, “If a consumer has never seen a product, how can they describe what it looks like in Google Search? Video provides a visual reference, a link to the product page, and demonstrates why the product is relevant or different from anything else on the market today. So you can see why interactive video marketing is necessary.”

Interactive Video Analytics Can Quantify Success

Baugh launched COTU because, when he began video marketing, “there was no justification for how video performed, what its goals or expectations were, or what products sold because of it.” 

COTU is changing that by demonstrating to marketers and brands how the collective components of a campaign could drive sales. With the data available, it’s possible to make informed decisions that could refine campaign targeting.

The platform lets marketers A/B test different elements while measuring product clicks and card clicks that track engagement. Unlike traditional TV commercials where views were the gold standard, you can now identify and monitor the points within a video where people engage. 

“COTU offers new data that answers questions such as: How many times was your product clicked on? At what point in the video did people try to learn more? Where are they trying to gain more information?” Baugh says. “It also lets you view and compare results within a campaign from a central dashboard.”

Thanks to COTU’s robust analytics, you can identify precisely when conversions happen in interactive videos, allowing you to target customers more effectively and boost sales and loyalty. 

Baugh emphasizes that COTU offers more than interactive video. “It lets you better understand your brand, your client, your sales strategy, and the success of your video marketing campaigns, and justifies your return on investment.”

Interactive Video Marketing Trends

In as early as 1996, the Harvard Business Review recognized that interactivity has defining features that could transform one-way marketing communication into a customer-centric dialogue. That’s because the analytics would allow marketers to save and track each interaction and then communicate with individuals in a way that considers their unique responses. 

Today we can all witness this shift in the advertising communication style. Previously, brands added interactive components to spruce up their videos, whereas now interactivity is a part of the early stages of campaign conceptualization. 

It has evolved from an afterthought to a priority carefully orchestrated into the viewing experience.

Philip’s ‘Click & Style’ campaign, released in 2014, is an early example of the shift in video marketing communication tactics. The interactive video campaign allowed men to explore the various shaving styles available with Philips’s electric razor through a narrator whose facial hair and accents changed depending on what viewers clicked. 

According to Magna, a leading media investment and intelligence company, interactive ads increase brand recognition by 23%, and 76% of viewers are more likely to act after watching interactive content, such as sharing a video or searching for products online—demonstrating the effectiveness of this type of video marketing.

Forward-thinking brands like Philips take advantage of interactive videos to communicate their story and express their company value. The ‘Click and Style’ mobile campaign allowed users to personalize their viewing experience, showcased the product’s versatility, and created a lasting impression of the brand.

As Baugh says, “even if [you] don’t make a sale immediately, consumers know what your product is made of, where it’s from, and how it adds value to them.” 

What Does the Future Hold?

If McKinsey’s predictions are anything to go by, the future of video content is immersive, gamified, and diverse. Marketers are working to offer content underpinned by a value proposition, allowing customers to take action in the moment. Baugh knows that customers have different expectations, and interactive video could enable brands to remain relevant regardless of what the future may hold for them.

What Do Marketers Want?

Marketers want a solution that provides accurate data to understand customers in real time. Those investing in video marketing know that it is a differentiator and disruptor offering increased merchandising participation. Yet, not all interactive video software are as advanced as COTU.

One marketer observed that with COTU, “It’s extremely valuable to be able to see which products were clicked on more. I can determine which ones are ‘bestsellers’ or ‘bottlenecks’ and pivot my strategy quickly.” Another said, “It does not interfere with the user experience and enhances the viewing experience.”

Essentially, they’re looking for an interactive video SaaS solution that offers A/B testing, optimization, and granular metrics that deliver ROI. This way, they can motivate strategies and demonstrate how, for example, the placement of a product card at the end of a video increased sales by a certain percentage.

What Do Video Marketing Consumers Want? 

Consumers desire information, convenience, and entertainment. People are naturally curious and want to learn more about the products they like. With interactive video, “they’ll know what the product is made of, where it’s from, and why it adds value to them, even if they don’t buy it right away,” Baugh explains.

As for convenience, one customer sums it up succinctly: “There are so many times where I’m watching something, and I’ll think, ‘Oh my gosh, where is that from? How can I get that?’ and, right at that time, a product card pops up on the [COTU] video and shows you the item you can click to buy immediately. And it’s not distracting, but subtle. Having this would be such a good help.”

Lastly, there’s entertainment to consider. The number of channels for reaching audiences has grown exponentially. Consumers suffer from content fatigue and dislike ads—as many as 42% of internet users have ad blockers. This is why creating interactive video content is so important. It engages audiences and gives them something to do, see, and experience.

Do You Want To Engage Customers Hiding Behind Ad Blockers?

Connected TV Will Contribute to Brand Loyalty

Like Disney, which created a successful Star Wars merchandise empire and several spin-off series (‘Star Wars: Obi-Wan Kenobi,’ ‘The Book of Boba Fett’), Netflix has also used the intellectual property of its shows to expand profit opportunities. Among the more interesting projects was their partnership with the Brooklyn Museum for an exhibition centered around the costumes from The Queen’s Gambit and The Crown. 

“Brands also aren’t making one-off video content as much as they are creating content with subcategories,” Baugh states. “Audiences are connected to characters and storylines, and they want to purchase and interact with things related to these [fictional] worlds.”

This sentiment creates more opportunities for brand loyalty. 

New stories based on existing characters allow brands to reach audiences who are already consuming content enthusiastically. Baugh predicts, “there will be a large opportunity to impact people at home with connected TVs—we have seen that disruption in mobile, and the next disruption will be in television.”

For streamers, it is not just about attracting large crowds but also about creating franchises that can be monetized in various ways. Thus, instead of a mass audience, they have a segmented audience network enthusiastically forming different character fan bases.

Lines Will Blur Between Interactive Film And Gaming

Nowadays, we see games that look like films and films using gaming technology. In 2022, Sam Barlow released his third interactive film video game, Immortality, and James Cameron’s blockbuster Avatar: The Way of Water hit movie theaters.

Marketers can utilize these trends to create interactive video stories on a macro level. If you combine what advertisers were trying to do in the 1960s by inventing brand mascots (like Ronald McDonald or the Marlboro Man) with a film director’s ability to create a narrative in a fictional world, you’ve got interactive branded films. 

Consumers will start “deeply connecting with these characters and they’ll want to purchase some of the things they are wearing or advertising,” Baugh says, “which again offers more opportunities for brands to capitalize on their intellectual property (IP).”

Virtual and In-Store Transition Will Become Seamless

Scantrust found that 48% of QR code users use QR codes several times a month and could make “a product’s story more transparent and trustworthy.”

QR code scanning became a staple for going contactless during Covid-19 pandemic, which also propelled its widespread adoption in retail. Consequently, it has become invaluable for creating a holistic and unified customer experience, connecting digital and physical marketing techniques. 

It’s a convenient way to interact with businesses since nearly everyone has a smartphone. Scanning a QR code is much easier than typing a long URL into a phone. Users don’t need to download an app to scan them and can access special offers, join loyalty programs, make payments, or watch interactive product-related videos

Baugh already has customers interested in putting QR codes on store merchandise tags. “Now consumers can scan a QR code and be taken to a video that shows how the products work in real life or that showcases a customer testimonial—that’s the power of video,” explains Baugh. QR codes also improve efficiencies since customers no longer need to ask retail staff about products.

All in all, Baugh is passionate about making interactive videos accessible to marketers and brands: “We have the content being made, the technology to access it, and the consumer who is hungry and looking to consume this content.”

Interactive video technology is available to you, too. Are you ready to jump on board and future-proof your brand in an ever-evolving interactive video marketing landscape? 
Request a COTU demo and find out how easy it is to create captivating video campaigns to engage your audience. With COTU, you can leverage interactive video analytics to gain insight into consumer preferences, track ROI, and create innovative marketing videos that will have your audience talking!