Online retailer 1-800-Flowers recently said “I do” to a partnership with YouTube. A “Will you marry me?” contest to find the most intriguing marriage proposal is now under way, marking the first component of a year-long relationship with Google, the parent of the fast-growing social media site.

Last September, Neiman Marcus took over the YouTube homepage to promote its 100th anniversary. A specially created video showcased the luxury department store’s style savvy. American Eagle, Gap, Ice.com, Victoria’s Secret, Macy’s, Nike, adidas and a handful of others have also dabbled on YouTube, testing the waters to determine what works and what doesn’t.

Still, the lion’s share of retailers remains on the sidelines, tuning in to view online videos only when their brand is parodied . . . or worse. Retail executives say they’re intrigued by YouTube and other social networking sites like MySpace and Facebook, but they’re not ready to get in the game – at least not yet.

The biggest stumbling block is fear of trademark infringement and the desire to protect their brand from being used improperly. The global power of the web to enable anyone, anywhere to instantly disseminate information and images on a shoestring budget represents a threat that most retailers and brand owners feel ill-equipped to manage.

Additional worries factor into retailers’ social media paralysis. Some fear that their operations are too conservative for the more free-wheeling approach of YouTube. Others plead ignorance or offer excuses about the overwhelming task of managing social media. Then there are the skeptics who question its ability to lift sales.

Experts acknowledge retailer’s concerns, but refuse to allow executives to use fear as an excuse for wavering.

“It’s a challenge for retailers – one that is shared by the entire advertising community,” says David Polinchock, founder and chief experience officer at Brand Experience Lab. “In the past, companies controlled their media buy. They knew the target and they knew where to find those eyeballs. That’s not the case any more and it’s scary.

“What’s more, a few years back shoppers accepted mediocrity,” he says. “Now, they won’t tolerate a poor shopping experience and they have no qualms about sharing a company’s flaws with millions of Americans in online blogs and videos.”

Opportunity knocks
Still, Polinchock views the social aspect of the web as a huge opportunity, pointing out that most retail companies have a lot of content. “The problem is that they’re building content on one end of their business and don’t think to use it in another; they need to rethink that.” Retail companies should be looking for ways to engage brand “evangelists” and ought to explore the use of how-to videos, he says, provided that they’re authentic and relevant within the context of the brand.

Sucharita Mulpuru, principal analyst at Forrester Research, contends that while there may not be huge upside potential in sales, there is little downside risk to social media. “Producing an online video is relatively inexpensive and low effort, especially juxtaposed with the number of eyeballs this media vehicle delivers. I ask executives, ‘What are you afraid of? Is it that someone will parody your brand? Are you afraid someone will post a negative video talking about what went wrong in your store?’”

The challenge, Mulpuru says, is not the policing of YouTube and MySpace and their social content counterparts: it’s in executing well in every aspect of your business. “You can’t cheat on the customer experience or shoppers are going to call you on it – and there’s a good chance they’ll do it using an online video shared on YouTube,” she says.

Anne Bologna, founding partner and president of Toy, the New York agency that dreamed up OfficeMax’s ElfYourself holiday campaign, insists retailers’ concerns about protecting their brand are manageable.

“You can put protections in place to safeguard your brand on YouTube, like deactivating user comments,” she says. “Still, I would caution that in a world of transparency, you have to be careful not to overdo it. There’s something to be said for developing a thick skin and having a sense of humor.”

Bologna encourages clients to think of social-networking sites as an additional media channel. With YouTube reporting between 55 million and 75 million unique users every month, she’s hard-pressed to figure out why a company wouldn’t want to put itself out there. “It’s time to understand what works in this space and come up with a creative approach to building content. Last year you could watch from the sidelines: now it’s time to get in the game.”

Defining moment
Indeed, 2008 is shaping up to be a defining period for online videos. Once a renegade source of content, online social networking has morphed into a segment that’s difficult to ignore. According to the latest comScore Video Metrix, Americans viewed nearly 9.5 billion online videos in November, when they spent about an hour more watching videos than they did just 10 months earlier.

YouTube’s share of the online video market is edging past 30 percent and climbing, propped up by Google’s $1.65 billion investment in November 2006. comScore found that 74.5 million people viewed 2.9 billion videos on YouTube.com in November – an average of 39 videos per viewer. This compares with 43.2 million people who viewed an average of nine videos on MySpace during the same period.

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