By Ronnie Scott

Six years ago, ad executive Ed Robinson carried out an experiment. He spent $10,000 to produce a humorous video about a man who meets an explosive end while inflating a child’s raft. He attached his firm’s Web address to the clip and emailed it to five friends. Then he waited.

By the end of the week, more than 60,000 people had seen the twelve-second video, Robinson says. The video gad “gone viral”, passing from Robinson’s friends to their own friends and from there to blogs and sites across the Web. Within three months, Robinson’s Web site received 500,000 hits.

For Robinson, the traffic was confirmation that the video and others like it could create a buzz and, in turn, make big bucks.

Companies have gotten the message. Lured by the prospect of reaching millions of consumers without also spending millions of dollars for television air time or space in print media, companies have shifted more ad dollars to the Net. Video viral marketing – so named because it relies on computer users to spread commercials from person to person – has expanded from a negligible piece of the advertising pie to a $150 million industry, researchers estimate.

However, viral marketing has become a victim of its own success. As more ads and user-created videos go online, getting ads to go viral has become increasingly difficult. Whereas these ads were once relatively rare, they now have to compete with millions of other video clips. Companies need to spend more to give their message an edge. Today, Robinson’s London company, The Viral Factory, charges $250,000 to $500,000 to create ads he guarantees will reach a wide audience.

Not only do advertisers need to spend more to make the ads, but increasingly, they have to pay to get them seen in the first place. Rather than waiting for new videos to drop into their mail boxes, users are now going to sites like YouTube for entertainment. After all, users go to these sites to see the videos most people find interesting, not ones some company paid to place.

Neither the sites nor advertising companies want virals to become the new online spam. Still, with people spending more time on the Net, it seems highly likely that viral video advertisements will become mainstream before long. And, as competition for online user attention increases, companies will be forced to do more to ensure their ads are watched.

From Business.