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The Video Toll Gate

November 30th, 2006

Last night, we started a new series of calls especially for Internet marketing beginners.

It’s a chance for people who are just getting started to call in and get answers to those pesky and sometimes embarrassing "A B C" questions that are often hard to nail down.

If you’re a beginner and you want to be notified the next time we do a call like this (they cost nothing and are hype-free), go here to register: http://www.thesystemseminar.com/nextstep

The reason I bring thing up is that last night someone asked a question about how to profit from Internet video and it gave me a chance to share a business model that no one else seems to be talking about.

Not exactly beginner’s material, but because Internet video is so new it’s an opportunity that has not occured to many people – yet…

The caller was a video producer. This fellow already knows how to shoot and edit video and seek out and work with clients.

His question was "How can I cash in on the Internet video boom?"

Here’s my answer:

1. Grad the low hanging fruit first

If you’re already producing video, you should immediately add the service of digitizing it, hosting it, and maybe even promoting it for your clients.

Video production is normally a "one shot" business. You go, you shoot, you hand over the tape, you get your check and the business is over. It beats digging coal or picking cotton, but it’s not an optimal way to build wealth.

The way you build wealth is to turn one-time actions into recurring income streams.

By adding Internet video services, you not only increase your income per transaction, you also distinguish yourself from all the other guys with a camera in your market. Not only that, but you also open the door to recurring income by getting into the video hosting (or the term I prefer management) business.

How does this work in practice?

Step One:  Charge your client a fee to prepare his video for the Internet.

Step Two: You make the arrangements for the hosting of the video for a monthly or annual fee payable to you.

Many of your clients will need other services as well: web design (you can’t just stick a bare video on a page) and marketing (getting people to the video and capturing their e-mail addresses.) 99% of your clients won’t have a clue as to how to do this, but the smart ones will value it highly.

As an Internet marketer, you know that we’re just talking about putting up a page, tagging it correctly to make it search engine friendly, creating an opt-in offer, and managing and harvesting the value of the names collected with an autoresponder sequence.  For an Internet marketer with even the most basic skills, all this is a piece of cake. For your average business, it’s rocket science. In fact, it’s beyond rocket science because most businesses still don’t get  how to use the Internet to build their businesses.

What started as a simple shoot and edit job becomes a shoot-edit-digitize-upload-web page creation-opt-in creation-mailing list management-hosting business. I highlighted the word business because that’s what it’s become. Once you start managing their Internet video promotions, you become a fixed part of your client’s advertising budget which means you get checks for as long as they can write them.

How easy is it to move all their video and all the other stuff I described to another provider? Depends on their level of sophistication, but if you make it simple for them and provide an excellent service that produces results (like a growing mailing list that generates new inquiries and sales) why would they ever want to move?

OK. That’s the low hanging fruit.  Let’s get to the really good stuff.

2. Become the advertising toll gate

When I was a very small boy, I was fascinated by toll booths. Not knowing much about business, toll booths were easy to for me to understand and appreciate. If you want to ride on a particular road, you have to pay money to the toll keeper. It seemed like a very simple business that could not fail to make money. (It turns out that toll roads are a fantastic business.)

Another kind of toll gate business is the advertising business.

As business owners, when we think about advertising with think about buying it and making it work. (And it is a lot of work to make advertising work, isn’t it?)

Wouldn’t it be nice instead of paying for advertising, to sell it, or better yet collect it, and let someone else worry about whether it works or not? Sure it would be. The challenge is how to put yourself in that position, in the advertising toll gate.

The dawing age of Internet video opens the door for us…

Here’s how Internet video entrepreneurs can create their own person toll booth: specialize and aggregate.

In other words, don’t just provide Internet video services for random clients, pick a niche and specialize and then create a portal where everyone in that particular niche must advertise.

Here’s an example of what I mean…

Let’s say you live in a major metropolitcan area. If you do, you can count on the fact that there is a big, competetive market of restaurants. They all want customers and they all spend regular money on advertising to get them.

What if you specialized in online video promotions for local restaurants and then put all those ads in a single spot and used that content to attract and build a relationship with all the restaurant customers in your area?

Now, not only do yourclients need you to shoot and stream their videos for them, they need access to the portal that you own.

How long do you collect fees from them for the right to advertise on your portal? For as long as they are in business.

How easy is for them to disentangle themselves from you? Not very and why would they want to? You’ve become the central clearinghouse for all video information about dining out in your area. If you’re a smart Internet marketer, you can imagine all kinds of ways to promote a site like this and monetize the traffic above and beyond advertising revenues.

So how do you get started?

First, start now. The first one into any market with the biggest bang is going to have a good chance to put a lock on it.

Second, get to critical mass fast.  It would pay you to select a few high profile clients in your niche and just give away the service. Produce the promotion for free and give it a spot on the portal for free for a good chunk of time (say six months).

What’s critical mass? Three clients. Five clients. Something that makes people go: "OK. This is for real."

Once you’ve got the critical mass you need to have basic credibility, get the media involved to write about your brilliant venture. Remember it’s 1994 all over again. In 1994, anything anyone did on the Internet was noteworthy. Right now, for this little window in time, it’s the same for Internet video.

Press coverage will give you credibility which will draw paying clients to you and give you great sales tools for your prospecting.

I’m using local restaurants as an example, but this model would work for any niche where clients need to advertise and need to have a high profile.

Will you make out like the founders of YouTube? No, but you could create a business that makes money year in and year out in a durable way without the lot of ups and down that most Internet entrepreneurs are prey to.

Increasing pay-per-click costs? That’d be good news for you as someone selling advertising.  Capricious  search engine  reshufflings? Great! Clients will need their place on your portal even more.

The key: Get to critical mass fast and first. Now’s the time.



P.S. If you’d like to receive updates about new opportunities in the quickly evolving world of Internet video, visit this page and sign up to be on the notification list. It’s low volume and zero spam.



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  1. November 30th, 2006 at 10:26 | #1

    Ken, superb post and thoughts as always; this is one of my favorite topics, and you’ve done a great job with your points, and useful advice.
    Excellent ideas for people to offer value-added video production and hosting, especially to small biz and other marketing sites. I like your topic headline too re “toll gate”, great analogy.
    Thanks for all the useful tips, your insights are valuable for everyone. Keep up the great work!
    Ken Calhoun

  2. November 30th, 2006 at 10:35 | #2

    Just finished our video which is bringing great results for our home pages. Take a peek at the above site.

  3. Dan Shannon
    November 30th, 2006 at 10:46 | #3

    With 20 years under my belt as filmaker, producer and now more recently internet marketeer with a strong interest in video online, I feel Ken’s the comments on present timing opportunities are right on. I have come full circle from selling my time as a video producer with studios to producing films for international tv, often at a loss in view of ‘making it big’ on international sales from TV but this has not always played out…in the end, I have retooled my thinking completely and am builing a ‘ground up’ approach, building a series of niche target markets, offering them what they are actually looking for, and keeping the whole business of content, ruthlessly centered on real customers with real needs…I no longer work the the TV industry, and have skipped right over the whole ‘get it on tv and it will sell’ mentality.
    Thanks for the valued insight.

  4. November 30th, 2006 at 10:48 | #4

    Ken, you’ve crystallized previously disparate ideas into a cohesive plan of action. Well done! As a “one-shot” photographer, I realize that I have an uphill battle of trading time for money indefinitely, but as an internet solutions provider with a focus on using video as a traffic and conversion tool, the sky is the limit. Thank you for taking this subject and applying your talent for making complex ideas easy to understand.
    Since I’m new to internet marketing, the basics that many of your readers take for granted is still part of my current learning curve, but video comes very naturally to me. Thanks to your valuable ideas, I won’t be tempted to go from a one-shot photographer to a one-shot videographer. I look forward to updating you on how I apply your strategies.
    Best regards,
    Frank Rodriguez

  5. November 30th, 2006 at 11:20 | #5

    Thanks for that vision of the “Video” future that is here right now. I too am a beginner and your answer to the question really gives a clear outline of what to do and how to do it…and also “Why” to do it.
    Thanks much.

  6. November 30th, 2006 at 11:31 | #6

    Ken,That was a great call last night, thank you for the work that you do.
    Here are some resources for the streaming video that was discussed.
    The royalty free music now playing is one of hundreds of Music Loop Packages™ available at BBM.net. This special collection of royalty free music was created by a collective of professional musicians from all over the world and carefully assembled to ensure that your search for a professional-sounding, royalty-free piece of music is fast and easy.
    BBM.net’s Music Loop Package™ format makes our library the perfect choice for corporate multi-media, Powerpoint, Flash and web projects. And we offer custom music for broadcast projects, too. Start your royalty-free music search now

  7. November 30th, 2006 at 11:38 | #7

    Last night one of the ladies needed a web host or website designer. Here is a great location for templates:

  8. November 30th, 2006 at 12:55 | #8

    As always, a great post. Just had to echo this on line that jumped out at me in a huge way:

    The way you build wealth is to turn one-time actions into recurring income streams.


  9. November 30th, 2006 at 12:55 | #9

    It’s amazing how easy it is to do business when you start dealing with any non internet marketing niche.
    And the potential for online video is astounding.
    We just did a video test for the American Viniyoga Institute.
    A rough video slideshow with a really average audio.
    This made some very unexpected sales…
    If you take a look at this video you’ll pick up quite a few ideas on niche markets perfect for online video (travel and real estate for example).
    Kindest regards,
    Andrew Cavanagh
    P.S. Here’s another video – are you making these web design mistakes on your sales page…?

  10. Bob Perl
    November 30th, 2006 at 13:51 | #10

    My name is Bob Perl from the Atlanta area andI am the video producer who asked those questions about Internet Video. Your answers
    confirmed what I thought about the coming explosion of small business using streaming video on the internet. Traditional advertising and marketing methods (newspaper, TV, etc.) are quite expensive, wasteful and non-trackable. A newspaper is
    discarded once it is read and is hit or miss. TV ads require costly production values (special EFX, etc.) and are billed on
    a pay-per-play basis which is very costly.
    It seems that streamed video on the client’s
    website (or the portal) would be far more
    cost effective for the client (bandwidth is
    way cheaper than broadcast time), and is
    trackable (e-mail response). I believe that
    advertising dollars are flowing away from
    traditional advertising and toward the internet. Your insight about “1994 all over
    again” has given me my new business plan!
    In the world of internet marketing I believe you are the man who knows what he is talking about and presents it in the most credible, professional way.
    Thank you.
    Bob Perl
    Many “small” businesses

  11. November 30th, 2006 at 14:31 | #11

    Excellent advice, Ken. I’ll be sharing this post with my clients.
    Dan Janal
    PR LEADS.com

  12. Valerie
    November 30th, 2006 at 15:34 | #12

    Hey Ken,
    Now you are getting to the point with information that we can use…
    Nice work,

  13. November 30th, 2006 at 16:53 | #13

    Your advice is right on target, and first rate.

  14. November 30th, 2006 at 23:46 | #14

    Are there any firms that have subscription shopping cart systems and membership management software specifically for video on the web?

  15. December 1st, 2006 at 10:37 | #15

    Wish I’d caught your show but I’m extremely excited about all the pieces of the internet puzzle that are beginning to jell for us. I’ve gotten my first video clips of John doing a demo( slapping meat around and cutting it up) and we’ll post on the new website to promote his book Confessions of a Butcher-eat steak on a Hamburger budget and save$$$ I’ve found a college kid that will do this for me but would like to do it myself before he moves on, so all tips are welcome 🙂

  16. Ken McCarthy
    December 1st, 2006 at 20:29 | #16

    Greg – Can you be more specific? What are you trying to accomplish?

  17. Tony Ostian
    December 2nd, 2006 at 19:32 | #17

    As usual Ken, your pearls of marketing wisdom takes my breath away. The biggest a-ha moment for me is also…
    The way you build wealth is to turn one-time actions into recurring income streams.
    Tony Ostian
    THE Web Copy Guy

  18. Rick Montieth
    December 10th, 2006 at 23:42 | #18

    Ken, I really enjoy and value the information you share with us. I signed up to be notified for these calls but I must have missed the email. hopefully I will catch the next one. One question for anyone, any thoughts on using a white background or a black background for a video when one person is making a sales pitch? Thanks

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